This week, stainless steel continued to show a trend of weakening spot prices and production costs in tandem. Amid the off-season for consumption, demand remained persistently weak. Stainless steel traders offered discounts to facilitate transactions, leading to a continuous decline in prices. On the cost side, although high-grade NPI prices rose slightly due to the firm support from nickel ore prices, the prices of stainless steel scrap and high-carbon ferrochrome both pulled back amid production cuts by stainless steel mills due to losses, resulting in sustained losses for stainless steel mills. Taking 304 cold-rolled products as an example, based on the raw material prices of the day, the cash cost decreased by 55.47 yuan/mt this week, with the loss ratio narrowing to 5.82%. If calculated based on the cost of raw material inventory, although the cash cost decreased by 81.88 yuan/mt, the loss ratio remained at 4.77%.
Regarding the cost of nickel-based raw materials. At the beginning of the week, supported by the strong nickel ore prices, NPI traders showed strong reluctance to budge on prices, significantly reducing the number of low-priced offers in the market and driving a slight increase in high-grade NPI prices. However, stainless steel enterprises, facing prolonged losses due to the mismatch between costs and selling prices, were extremely cautious about purchasing high-priced raw materials, resulting in low purchase willingness. Additionally, as the stainless steel market entered the traditional consumption off-season and news of production cuts by steel mills emerged frequently, the loose supply situation in the high-grade NPI market did not see substantial improvement. On Friday, a major stainless steel mill maintained its purchase price for high-grade NPI at 940 yuan/mtu, severely denting market confidence and leading to a further decline in retail quotations. By the close of trading on Friday, the price of high-grade NPI with a grade of 10-12% had fallen by 3 yuan/mtu cumulatively, ultimately closing at 951 yuan/mtu. In the stainless steel scrap market, prices continued to decline in tandem with stainless steel finished products. Despite the narrowing economic disadvantage of stainless steel scrap compared to high-grade NPI, it still lacked cost advantages. As of Friday, the price of 304 off-cuts in east China had fallen by 100 yuan/mt cumulatively, with the latest quotation dropping to 9,850 yuan/mt.
Regarding the cost of chrome-based raw materials, domestic high-carbon ferrochrome production has continued to rise recently, significantly increasing the availability of retail supplies in the market. Meanwhile, chrome ore prices showed a downward trend during the week. Overseas mines not only sold off spot chrome ore in bonded zones but also lowered their futures quotations for chrome ore, further weakening the cost support for ferrochrome. Coupled with the continuous news of production cuts by stainless steel mills, market expectations for ferrochrome demand decreased accordingly, denting the confidence of ferrochrome traders and driving a continuous decline in retail prices. However, recent production halts by overseas ferrochrome enterprises have led to a significant contraction in ferrochrome supply in the international market, and it is expected that China's ferrochrome imports will decrease. Considering the need to secure raw material supply, stainless steel mills may exercise relative restraint in lowering prices during ferrochrome procurement tenders. Data shows that high-carbon ferrochrome prices in Inner Mongolia fell by 100 yuan per 50 base tons this week, with the latest quotation at 7,850 yuan per 50 base tons.
Overall, the current stainless steel market continues to experience sluggish consumption. Despite production cuts implemented by steel mills, the extent of these cuts has not yet matched the pace of demand decline. Under the dual pressures of supply surplus and high shipping pressure, stainless steel prices are expected to remain in the doldrums in the short term. As the scope of production cuts by steel mills expands, demand for raw materials such as nickel and chromium continues to shrink, further exacerbating the downward pressure on furnace charge prices. If this situation persists, the stainless steel industry may fall into a vicious cycle of production contraction, low prices, and declining costs, posing significant challenges to market recovery.
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