Cost Advantages and Demand Support Drove Stainless Steel Scrap Prices Higher [SMM Stainless Steel Scrap Market Weekly Review]

This week, prices of 304 stainless steel scrap off-cuts in east China strengthened to 10,400-10,500 yuan/mt; prices of stainless steel scrap off-cuts of the same specification in Foshan also rose, with the price range at 10,000-10,300 yuan/mt. From the raw material cost perspective, the current cost of producing stainless steel entirely with stainless steel scrap was about 14,364.47 yuan/mt, while the cost of producing it entirely with high-grade NPI was 14,640.04 yuan/mt.

This week, stainless steel scrap prices strengthened and moved higher, mainly driven by the combined effects of linkage with furnace charge prices, cost-effectiveness advantages, and demand support. Stainless steel finished product prices have remained generally stable recently and struggled to rise; however, high-grade NPI prices still held firm, and high-carbon ferrochrome prices also moved higher in tandem recently. Following the trend of other furnace charge materials, stainless steel scrap also showed an upward trend. Stainless steel planned production for March is expected to rise significantly, boosting procurement demand for stainless steel scrap; meanwhile, supported by nickel ore and chrome ore, the pattern of high-grade NPI and high-carbon ferrochrome prices holding up well is unlikely to change, further driving stainless steel scrap prices higher. In addition, although the cost-effectiveness advantage of stainless steel scrap over high-grade NPI has narrowed somewhat, it still retains a considerable advantage at present, providing strong support for stainless steel scrap prices and reinforcing bullish market sentiment. However, it should be noted that the current recovery in downstream demand remains limited, and stainless steel social inventory is at a relatively high level. Stainless steel mills are facing considerable shipment pressure, causing stainless steel finished product prices to meet resistance in moving higher and in turn placing some constraints on further gains in stainless steel scrap prices. Overall, the stainless steel scrap market this week showed a pattern of "prices moving higher, raw material support, and demand under pressure." Although gains in finished product prices were capped by their struggle to rise, supported by stronger demand, firmer substitute raw materials, and cost-effectiveness advantages, stainless steel scrap prices are expected to remain generally stable with slight rise in the period ahead.