Futures drove down stainless steel spot prices, while increases in chromium and nickel raw material prices exacerbated losses for steel mills [SMM Analysis]

This week, stainless steel spot prices pulled back after stopping the rise, but production costs further increased, leading to a wider 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 30 yuan/mt this week, with the loss ratio increasing to 5.97%; if calculated using the cost of raw material inventory, the cash cost rose by 53.58 yuan/mt, with the loss rate remaining at 3.64%.

In terms of nickel-based raw material costs, high-grade NPI prices continued their strong upward trend this week. Recently, domestic low-grade high-NPI supply has been relatively tight, while the proportion of high-grade supply is higher, causing the market average price to rise. Despite the strong bullish sentiment among domestic traders, as high-grade NPI prices continue to climb, downstream steel mill buyers' acceptance of high-priced supplies gradually decreases. Additionally, this week, stainless steel prices fell consecutively under the influence of futures, putting some pressure on the further increase in high-grade NPI prices. By Friday, the price of 10-12% grade high-NPI had risen by 3.5 mtu, closing at 929 yuan/mtu. In the stainless steel scrap market, although stainless steel finished product prices declined this week, both nickel and chrome prices strengthened, keeping stainless steel scrap prices basically stable. However, compared to high-grade NPI, its economic advantage remains weak. By Friday, 304 off-cuts prices in east China were basically stable, with the latest quote around 9,800 yuan/mt.

Regarding chromium-based raw material costs, high-carbon ferrochrome prices rose slightly this week. Recently, insufficient port capacity in Tianjin led to rising freight costs and restricted transportation. Although chrome ore port inventories are at high levels, ferrochrome producers' raw material reserves appear relatively tight, leading to an increase in chrome ore prices, which in turn pushed up ferrochrome smelting costs. In August, with stainless steel mills increasing production and the September-October peak season approaching, steel mills' enthusiasm for raw material procurement significantly increased. Meanwhile, overseas ferrochrome producers' continuous shutdowns have kept ferrochrome imports persistently low, making the market supply of ferrochrome increasingly tight. As the month-end approaches, with steel tenders about to be announced, the market's bullish sentiment has grown stronger. By Friday, the price of high-carbon ferrochrome in Inner Mongolia had risen by 75 yuan/mt (50% metal content), closing at 8,025 yuan/mt (50% metal content).