Off-Season Hits Stainless Steel Market: Prices and Costs both Slide [SMM Analysis]

This week, stainless steel spot prices declined in tandem with production costs, 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 decreased by approximately 109.67 yuan/mt this week, with the loss ratio reaching 5.71%. When calculated using the raw material inventory cost, the cash cost dropped by about 17.37 yuan/mt, and the loss rate remained at 7.33%.

On the nickel-based raw material cost side, high-grade NPI prices weakened further this week. With sluggish demand in the stainless steel market and continuously falling stainless steel prices, industry participants generally held a pessimistic outlook for the year-end market. Steel mills were already grappling with cost-price inversions and had low acceptance for high-priced raw materials. Additionally, NPI traders had needs to sell goods and collect payments by year-end. These factors collectively led to a further pullback in high-grade NPI prices. As of Friday, the price of high-grade NPI with 10-12% grade fell by 8 yuan/mtu to close at 916 yuan/mtu. In the stainless steel scrap market, prices remained in the doldrums despite the weak performance of finished stainless steel products and simultaneous declines in high-grade NPI and high-carbon ferrochrome prices. Furthermore, the issue of tight tax invoices persisted. Although the economic advantage of stainless steel scrap over high-grade NPI remained significant, the overall weak market sentiment made it difficult for the weak trend in stainless steel scrap prices to reverse. By Friday, the price of 304 off-cuts in east China dropped by 150 yuan/mt, with the latest offer around 9,200 yuan/mt.

On the chrome-based raw material cost side, high-carbon ferrochrome prices continued to fall this week. Although the steel mill tender price for high-carbon ferrochrome announced by major stainless steel mills in November held steady from the previous period, supply of high-carbon ferrochrome in the market was already relatively ample. Ferrochrome producers maintained high operating rates, and the market price, previously supported by a supply deficit, began to soften. Additionally, chrome ore imports remained high, port inventories for chrome ore kept increasing, and consequently, chrome ore prices pulled back. Although ferrochrome prices declined, costs also decreased simultaneously, allowing ferrochrome producers to maintain good profit levels. However, with stainless steel mills facing expected losses and potential production cuts, ferrochrome prices still had room for further decline. As of Friday, the price of high-carbon ferrochrome in Inner Mongolia fell by 125 yuan/mt (50% metal content) to close at 8,150 yuan/mt (50% metal content).