Procurement Prices for Raw Materials at Stainless Steel Mills Pull Back, Spot Prices Follow Suit with Continued Inverted Pricing at Stainless Steel Mills [SMM Analysis]

This week, stainless steel spot prices and production costs both weakened and declined, narrowing the losses incurred by stainless steel mills. Taking 304 cold-rolled products as an example, based on the day's raw material prices, the cash cost fell by about 114.62 yuan/mt this week, with a loss ratio reaching 5.49%; when calculated using the raw material inventory cost, the cash cost dropped by about 68.87 yuan/mt, and the loss rate remained at 7.18%.

On the nickel-based raw material cost side, high-grade NPI prices further declined this week. A major mainstream stainless steel mill issued a new round of procurement tender prices during the week, significantly lowering it to 880 yuan/mtu, pulling the market transaction center downward. Driven by traders' year-end shipment and payment collection needs, frequent news of production cuts at stainless steel mills recently, and the economic advantage of stainless steel scrap exerting pressure, high-grade NPI retail prices also moved lower. As of Friday, high-grade NPI with 10-12% grade fell by 15 yuan/mtu, finally settling at 890.5 yuan/mtu. In the stainless steel scrap market, overall conditions were in the doldrums. With prices for stainless steel finished products, high-grade NPI, and high-carbon ferrochrome all in a downtrend, the stainless steel scrap market struggled to operate independently. The pessimistic market sentiment persisted. Although stainless steel scrap maintained a significant economic advantage compared to high-grade NPI, its price still failed to reverse the weak trend. As of Friday, 304 off-cuts prices in east China fell by 150 yuan/mt, with the latest offer around 9,000 yuan/mt.

On the chrome-based raw material cost side, the decline in high-carbon ferrochrome prices slowed down this week. Tsingshan took the lead in announcing its December tender price for high-carbon ferrochrome procurement, which fell by 100 yuan/mt (50% metal content) MoM, significantly higher than the market's previous expectation of a 300-500 yuan decline. Although overseas futures prices for South African chrome concentrate ore further pulled back, reducing costs for domestic ferrochrome smelters and expanding their profit margins, the support from the high steel tender prices slowed further low-price sales in the market. Despite consistently low ferrochrome imports, the domestic supply shortage is not severe. Coupled with expected production cuts by stainless steel mills during the year-end off-season, sustaining high ferrochrome prices may be difficult. As of Friday, high-carbon ferrochrome prices in Inner Mongolia fell by 75 yuan/mt (50% metal content), finally settling at 8,000 yuan/mt (50% metal content).