Stainless Steel Downstream End-Users Struggle to Accept High-Priced Supplies, Stainless Steel Cost Increase Expected to Slow Down [SMM Analysis]

This week, stainless steel spot prices and production costs maintained synchronized increases, with the extent of losses at steel mills remaining basically stable. Taking 304 cold-rolled products as an example, based on the daily raw material prices, the cash cost rose by approximately 51 yuan/mt this week, with the loss ratio reaching 5.78%. When calculated using the raw material inventory cost, the cash cost increased by about 32 yuan/mt, and the loss rate remained at 2.23%.

On the nickel-based raw material cost side, high-grade NPI prices continued to show an upward trend this week. As the peak season approaches, social inventory of stainless steel gradually decreased, and the expected production schedule for stainless steel improved. Against the backdrop of macro tailwinds, stainless steel prices are expected to remain strong, sustaining the bullish sentiment in the NPI market. During the week, transaction prices for high-grade NPI climbed further. However, considerable cautious wait-and-see sentiment persists in the downstream stainless steel market, making it difficult to achieve high-priced transactions. Additionally, steel mills continue to face cost-price inversions, which limits their acceptance of high-priced NPI raw materials. As of Friday, the price of high-grade NPI with 10-12% grade accumulated an increase of 8 yuan/mtu, closing at 953.5 yuan/mtu. In the stainless steel scrap market, although prices of finished stainless steel products, nickel, and chromium all showed upward trends this week, stainless steel scrap prices remained basically stable. Compared to high-grade NPI, the economic advantage of stainless steel scrap further increased. As of Friday, the price of 304 off-cuts in east China remained largely stable, with the latest offer at approximately 9,750 yuan/mt.

On the chrome-based raw material cost side, the ferrochrome market exhibited a strong tone, with bullish sentiment continuing. This week, the overseas futures price for South African chrome concentrate ore with 40-42% grade further climbed to $279/mt, leading to an increase in ferrochrome costs. However, ferrochrome producers still maintain favorable profit levels, with operating rates at a relatively high level, and the tight spot supply situation has not worsened. Additionally, after consecutive price increases, which accumulated more than 400 yuan/mt since before Tsingshan's September tender announcement, downstream acceptance of higher prices has become relatively limited. Given the current volatile and struggling upward movement in stainless steel prices, the market finds it difficult to anticipate the next tender's increase exceeding 400 yuan. Rationality is gradually returning to the market, and the pace of price increases for high-carbon ferrochrome slowed down this week. As of Friday, the price of high-carbon ferrochrome in Inner Mongolia accumulated an increase of 75 yuan/mt (50% metal content), closing at 8,500 yuan/mt (50% metal content).