Market Weakness Leads to Broad Decline in Stainless Steel Furnace Charge, While Futures Drive a Slight Increase in Stainless Steel Spot Prices [SMM Analysis]

This week, stainless steel spot prices rose slightly, but production costs fell further, narrowing the loss margin for stainless steel mills slightly. Taking 304 cold-rolled products as an example, based on the raw material prices of the day, the cash cost dropped by about 33.79 yuan/mt this week, with the loss ratio reaching 5.88%; if calculated using the raw material inventory cost, the cash cost increased by about 19.93 yuan/mt, and the loss rate remained at 6.03%.

On the nickel-based raw material cost side, high-grade NPI prices continued to pull back this week. The stainless steel market underperformed in the peak season, with weak demand, and stainless steel prices remained in the doldrums. Stainless steel mills faced cost-price inversions and had low acceptance of high-priced raw materials. Under pressure from NPI traders to sell, the NPI market remained weak. As of Friday, the price of high-grade NPI with 10-12% grade dropped by 4 yuan/mtu, finally settling at 934 yuan/mtu. In the stainless steel scrap market, with weak finished stainless steel prices and simultaneous declines in high-grade NPI and high-carbon ferrochrome, stainless steel scrap prices trended weakly. Additionally, the issue of tight tax invoices for stainless steel scrap persisted. Although stainless steel scrap maintained an economic advantage compared to high-grade NPI, its price weakness was hard to reverse. As of Friday, the price of 304 off-cuts in east China remained unchanged, with the latest offer around 9,400 yuan/mt.

On the chrome-based raw material cost side, high-carbon ferrochrome prices continued to soften this week, showing a slight downward trend. During the week, a large stainless steel mill in northern China announced its November tender price for high-carbon ferrochrome procurement, which held steady from the previous month at 8,295 yuan/mt (50% metal content). This price was largely in line with market expectations. Currently, market supply remains relatively ample, and confidence in the ferrochrome market has weakened significantly compared to earlier periods, with downstream procurement transactions being sluggish. As ferrochrome producers actively sold, offers overall showed a weak trend. At the same time, chrome ore prices also softened and declined, leading to a further drop in the cost center for ferrochrome. Although ferrochrome producers still maintained profits, ferrochrome prices were unlikely to stay high. As of Friday, the price of high-carbon ferrochrome in Inner Mongolia dropped by 50 yuan/mt (50% metal content), finally settling at 8,400 yuan/mt (50% metal content).