Stainless steel market recovers, production schedule increases, and prices of furnace charge nickel, chromium, and stainless steel scrap rise simultaneously [SMM analysis]

This week, stainless steel spot prices continued to rise, and production costs also increased, leading to a wider margin of inversion for stainless steel mills. Taking 304 cold-rolled products as an example, based on the raw material prices of the day, the cash cost rose by 227 yuan/mt this week, with the loss ratio reaching 4.4%. If calculated based on the cost of raw material inventory, the cash cost increased by 151.82 yuan/mt, and the loss ratio remained at 2.14%.

In terms of the cost of nickel-based raw materials, the price of high-grade NPI continued to show a strong upward trend this week. Despite the recent continuous climb in the price of high-grade NPI, smelters still faced the dilemma of cost-price inversion, with cost support remaining firm, leading to a strong willingness among smelters to maintain high prices. Additionally, with the expected increase in stainless steel planned production for August, traders' bullish expectations also strengthened, and the on-board price of Indonesian high-grade NPI rose to 930-940 yuan/mtu. However, as the peak consumption season for stainless steel has not yet arrived, and some steel mills may still conduct maintenance and production cuts in August, stainless steel mills have a low acceptance of high-priced raw materials, and the market still requires further negotiation between bulls and bears. As of Friday, the price of high-grade NPI with a grade of 10-12% had risen by a cumulative 6.5 yuan/mtu, closing at 918.5 yuan/mtu. In the stainless steel scrap market, as the price of finished stainless steel products further increased and the supply of stainless steel scrap was already tight, the price of stainless steel scrap rose further during the week. Compared to high-grade NPI, stainless steel scrap still remained economically disadvantaged. As of Friday, the price of 304 off-cuts in east China rose by 150 yuan/mt, with the latest quote reaching 9,800 yuan/mt.

In terms of the cost of chrome-based raw materials, the price of high-carbon ferrochrome rose slightly during the week. Despite the high operating rate of domestic ferrochrome producers, overseas ferrochrome producers had not yet resumed production, and the retail supply of domestic ferrochrome remained tight in the near term. Market purchase enthusiasm increased, with active transactions during the week. Coupled with the expected increase in stainless steel planned production for August and the approaching traditional peak consumption season of "September-October peak season", the demand expectations for ferrochrome were further strengthened. Currently, ferrochrome producers enjoy good smelting profits and have high production enthusiasm. In July, the market had basically returned to a tight balance of supply and demand, with the supply gap not further widening. It is expected that further price increases may face resistance. As of Friday, the price of high-carbon ferrochrome in Inner Mongolia had risen by a cumulative 25 yuan/mt (50% metal content), closing at 7,925 yuan/mt (50% metal content).