Cost Pressure Eases Slightly but Demand Remains Sluggish: Stainless Steel Market Still Stuck in Inversion Dilemma in the Short Term [SMM Analysis]

This week, the spot price in the stainless steel market rose slightly, while production costs continued to decline. Despite the ongoing losses in stainless steel enterprises, the extent of these losses has narrowed. Taking 304 cold-rolled stainless steel as an example, based on the raw material prices of the day, the cash cost decreased by approximately 80 yuan/mt this week, with the loss margin narrowing to 6.44%. If calculated based on the cost of raw material inventory, the cash cost fell by 62 yuan/mt, with a loss rate of 6.47%.

The nickel-based cost side showed particularly notable market performance. During the week, the tender price of high-grade NPI at a stainless steel mill in south China fell to 940 yuan/mtu, with a tender volume exceeding 10,000 mt. Influenced by this, the price of high-grade NPI continued to decline, significantly reducing the nickel-based cost of stainless steel. Currently, the high-grade NPI market is well-supplied, coupled with production cuts of 300-series products by stainless steel enterprises, further exacerbating the downward pressure on prices. As of Friday, the price of 10-12% high-grade NPI had cumulatively fallen by 14 yuan/mtu, closing at 945 yuan/mtu. Notably, the price of stainless steel scrap rose against the trend, and its cost advantage over high-grade NPI has largely disappeared. As of Friday, the price of 304 off-cuts in east China had cumulatively risen by 100 yuan/mt, with a quoted price of approximately 9,700 yuan/mt.

On the chromium-based cost side, the price of high-carbon ferrochrome showed a weakening trend, with some retail low prices aligning with the tender price of Tsingshan's steel in May. With the recent resumption and increase in production by ferrochrome producers, the shortage of high-carbon ferrochrome supply has eased. Additionally, the overall weakness in the stainless steel market and enterprises' limited acceptance of high-priced ferrochrome raw materials have led to insufficient market confidence. As prices have reached a relatively high level, the loss margin for ferrochrome producers is relatively small, further driving down ferrochrome prices. The price of high-carbon ferrochrome in Inner Mongolia remained stable this week, with a current quoted price of 8,150 yuan per 50 base tons.

Overall, the production cost of stainless steel has gradually pulled back recently, with prices of major furnace charges such as nickel and chromium showing a weakening trend. However, due to the persistent weakness in downstream demand and the influence of uncertainties in macro policies, stainless steel prices still lack clear upward momentum in the short term. It is expected that the losses in stainless steel cost prices will persist until there are substantive improvements on the demand side.