Stainless Steel Spot Prices and Costs Decline Simultaneously, Losses Widen [SMM Analysis]

This week, stainless steel spot prices pulled back, with production costs declining in tandem, further widening the losses incurred by stainless steel mills. Taking 304 cold-rolled products as an example, based on the raw material prices of the day, the cash cost dropped by approximately 116 yuan/mt this week, pushing the loss ratio to 7.05%. When calculated using the raw material inventory cost, the cash cost increased by about 65 yuan/mt, yet the loss rate remained at 6.53%.

On the nickel-based raw material cost side, high-grade NPI prices accelerated their decline this week. Early in the week, major stainless steel mills set tender prices, which dropped sharply by 10 yuan/mtu. This guided the market center downward rapidly. Coupled with the simultaneous weakening of stainless steel prices during the week, the overall market weakness further dragged down high-grade NPI transaction activity. As of Friday, high-grade NPI (10-12% grade) prices dropped back slightly, settling at 938 yuan/mtu. In the stainless steel scrap market, prices also weakened this week alongside the decline in finished stainless steel and high-grade NPI prices. Additionally, tax invoices for stainless steel scrap remained tight. Although stainless steel scrap maintained its economic advantage compared to high-grade NPI, its prices struggled to rise significantly amid the overall market weakness. By Friday, 304 off-cuts prices in east China dropped slightly by 100 yuan/mt, with the latest offer around 9,550 yuan/mt.

On the chrome-based raw material cost side, high-carbon ferrochrome prices showed signs of softening from high levels this week, dropping back slightly. High-carbon ferrochrome production in October is expected to exceed 800,000 mt again, alleviating the previously tight supply. Combined with the recent weak performance of the stainless steel market, sentiment in the ferrochrome market weakened, with producers actively selling to lock in profits dominating the market. Some ferrochrome producers lowered their offers. Although chrome ore prices in the overseas market remained at a relatively high level this week, spot prices showed signs of softening amid ample chrome ore supply. Ferrochrome producers still maintained good profit margins, possessing some ability to offer discounts. As of Friday, high-carbon ferrochrome prices in Inner Mongolia fell by 100 yuan/mt (50% metal content), settling at 8,450 yuan/mt (50% metal content).