"September Peak Season" Arrives as Stainless Steel Prices and Costs Both Strengthen [SMM Analysis]

This week, despite continued rising production costs, stainless steel spot prices posted a relatively larger increase, narrowing the price inversion for steel mills. Taking 304 cold-rolled products as an example, cash costs calculated based on current raw material prices rose by 12 yuan/mt, pushing the loss ratio to 5.8%. When calculated using raw material inventory costs, cash costs declined by 19.56 yuan/mt, with the loss rate remaining at 2.37%.

On the nickel-based raw material cost side, high-grade NPI prices maintained strong upward momentum this week. As the market entered the traditional September-October peak season, stainless steel consumption showed signs of recovery, prompting steel mills to raise their production schedules. Additionally, anticipated macro tailwinds further boosted the NPI market. Meanwhile, NPI producers still faced significant cost pressures, and last week’s higher procurement prices from stainless steel mills notably improved market activity, driving offers even higher. By Friday, prices for 10-12% grade high-grade NPI had climbed by 5 yuan/mtu, settling at 945.5 yuan/mtu. In the stainless steel scrap market, while prices for finished stainless steel products, nickel, and chrome all rose this week, scrap prices remained largely stable. The economic disadvantage of scrap relative to high-grade NPI gradually diminished, making scrap’s cost advantage more prominent again. By Friday, 304 off-cuts prices in east China were largely unchanged, with the latest offers around 9,750 yuan/mt.

Regarding chrome-based raw material costs, Tsingshan’s higher-than-expected September tender price for high-carbon ferrochrome last week fueled particularly strong bullish sentiment in the ferrochrome market this week. Producers raised spot offers, quickly depleting low-priced supplies and driving transaction prices higher. Against the backdrop of rising ferrochrome prices, improved producer margins, and heightened production enthusiasm, chrome ore prices also edged up slightly despite relatively loose supply, increasing ferrochrome costs and further reinforcing market expectations for price hikes. Additionally, the shutdown of a major South African ferrochrome producer slashed the country’s direct exports to China to zero in July, tightening overseas supply. Domestically, despite already high ferrochrome production, tight availability persisted as stainless steel mills ramped up output for the September-October peak season, keeping ferrochrome prices on an upward trajectory in the near term. By Friday, Inner Mongolia high-carbon ferrochrome prices had risen by 150 yuan/mt (50% metal content), closing at 8,425 yuan/mt (50% metal content).