As the peak season for stainless steel approaches, nickel and chromium raw material prices rise, making it difficult to boost market confidence amid rising costs [SMM analysis]

This week, stainless steel spot prices rose slightly, but the increase still fell short of production costs, leading to an expansion in the losses of stainless steel mills. Taking 304 cold-rolled products as an example, based on the raw material prices of the day, cash costs increased by 90 yuan/mt this week, with the loss ratio rising to 4.86%. If calculated based on the cost of raw material inventory, cash costs increased by 38.79 yuan/mt, and the loss ratio remained at 2.24%.

In terms of nickel-based raw material costs, the price of high-grade NPI continued to rise strongly this week. The losses of high-grade NPI smelters persisted, with profits yet to return to positive territory. Manufacturers remained strong in their refusal to budge on prices and their intention to hold onto inventory. The planned production of stainless steel in August increased, driving up the demand for high-grade NPI. Meanwhile, the recent synchronous rise in stainless steel prices alleviated some of the cost pressure on stainless steel mills, increasing their acceptance of high-priced raw materials. Additionally, as the traditional peak consumption season of "September-October peak season" approaches, market expectations have strengthened further, and high-grade NPI prices are expected to maintain a strong upward trend in the short term. As of Friday, the price of high-grade NPI with a grade of 10-12% had risen by a cumulative 7 yuan/mtu, ending at 925.5 yuan/mtu.

In the stainless steel scrap market, stainless steel scrap prices initially rose and then fell in line with finished steel prices, remaining generally stable. Compared to high-grade NPI, its economic viability remained inferior. As of Friday, the price of 304 off-cuts in east China was basically stable, with the latest quote being around 9,800 yuan/mt.

In terms of chrome-based raw material costs, the price of high-carbon ferrochrome rose slightly further this week. Despite the high production volume of high-carbon ferrochrome within the month, domestic supply remained slightly tight due to the simultaneous increase in stainless steel planned production and the continued suspension of overseas ferrochrome plants. Additionally, the recent continuous rise in coke prices and the slight increase in chrome ore prices led to an increase in ferrochrome smelting costs. However, the smelting profits of domestic high-carbon ferrochrome producers are currently relatively substantial. Coupled with the slight drop back slightly in the steel mill tender price for high-carbon ferrochrome in August and the relatively loose supply of chrome ore at present, the momentum for further chrome ore price increases is weak. Therefore, the upward space for ferrochrome costs is limited, which to some extent restricts the recent price increase of high-carbon ferrochrome. As of Friday, the price of high-carbon ferrochrome in Inner Mongolia had risen by a cumulative 25 yuan/mt (50% metal content), ending at 7,950 yuan/mt (50% metal content).