Stainless steel prices rise in tandem with costs, but losses remain hard to reverse; chromium prices fall while nickel prices rise, leading to divergence in raw material prices [SMM Analysis]

This week, stainless steel continued to show a trend where spot prices and production costs rose in tandem, with the losses of stainless steel mills remaining largely unchanged. Taking 304 cold-rolled products as an example, based on the raw material prices of the day, the cash cost increased by 108.34 yuan/mt this week, with the loss ratio reaching 5.31%. If calculated based on the cost of raw material inventory, although the cash cost increased by 14.46 yuan/mt, the loss ratio remained at 3.64%.

In terms of the cost of nickel-based raw materials, this week, the price of high-grade NPI showed a trend of halting its decline and rebounding. Despite the continuous decline in nickel ore prices in recent times, high-grade NPI smelters still faced pressure from losses. Meanwhile, due to the rise in refined nickel prices, the enthusiasm for converting high-grade nickel matte into refined nickel increased, further compressing the operating rate of high-grade NPI and leading to a continued decrease in supply expectations. Recently, stainless steel prices strengthened due to macro tailwinds, and market transactions recovered somewhat, weakening the desire to bargain down prices on the raw material side. As of Friday, the price of high-grade NPI with a grade of 10-12% had increased by a cumulative 9.5 yuan/mtu, ending at 909.5 yuan/mtu. In the stainless steel scrap market, the tight supply situation remained unresolved. This week, stainless steel scrap prices continued to follow the rise in stainless steel finished product prices, further highlighting its economic disadvantage. As of Friday, the price of 304 off-cuts in east China increased by 150 yuan/mt, with the latest quote reaching 9,650 yuan/mt.

In terms of the cost of chrome-based raw materials, this week, TISCO took the lead in announcing the August high-carbon ferrochrome steel tender price, which fell by 200 yuan/mt (50% metal content) MoM to 7,645 yuan/mt (50% metal content). However, on Friday, Tsingshan announced the August high-carbon ferrochrome steel tender price, which rose by 100 yuan/mt (50% metal content) MoM to 7,995 yuan/mt (50% metal content), further widening the price spread between Tsingshan and TISCO's steel tenders, indicating significant differences in the expectations of different steel mills for the future market. Previously, the retail price of high-carbon ferrochrome had already taken the lead in pulling back, and this week, the price remained largely stable without significant fluctuations. The earlier bearish expectations had somewhat fallen through, and market confidence gradually strengthened. Despite the current steel tender prices, most high-carbon ferrochrome producers in Inner Mongolia were still profitable, and production enthusiasm remained high. However, overseas ferrochrome supply decreased, and coupled with the recent recovery in the stainless steel market driven by macro policies, expectations for production cuts at stainless steel mills decreased. In addition, steel mills stockpiled raw materials in advance based on expectations for production increases during the traditional September-October peak season, leading to the unexpected announcement of steel tender prices. As of Friday, the price of high-carbon ferrochrome in Inner Mongolia remained stable this week, with the latest quote being 7,850 yuan/mt (50% metal content).