Stainless Steel Underperformed in Peak Season, with Prices and Costs Pulling Back in Tandem as Losses at Stainless Steel Mills Persisted [SMM Analysis]

This week, stainless steel spot prices fell slightly more than production costs, further worsening the inversion between stainless steel mill prices and costs. Taking 304 cold-rolled products as an example, based on raw material prices on the day, the full cost profit margin was -1.19% this week; calculated based on raw material inventory costs, the margin was -0.55%.

Nickel-series raw material costs, high-grade NPI prices remained in the doldrums this week. Although nickel ore prices are currently holding firm and NPI traders are broadly bullish, SHFE nickel futures have been weak recently, while downstream stainless steel prices have struggled to rise. Stainless steel mills themselves are under heavy cost pressure and have shown low acceptance of high-priced raw materials, resulting in sparse market transactions recently; affected by this, high-grade NPI traders have faced considerable transaction pressure, and the price center edged lower slightly. As of this Friday, high-grade NPI with a grade of 10-12% fell by 2 yuan per nickel unit to 1,081.5 yuan/nickel unit.

Stainless steel scrap market, stainless steel scrap prices were stable this week, and the decline in finished stainless steel prices did not transmit to the steel scrap market, while prices of substitute furnace charge also remained stable. Tightness in tax invoices eased, the economic advantage of steel scrap became more evident, and high stainless steel mill production schedules drove higher consumption, lifting market transactions and easing inventory pressure. However, finished product prices struggled to rise, limiting upside room for steel scrap prices, which are expected to remain stable in the short term. As of this Friday, the price of 304 off-cuts in Shanghai rose by 100 yuan/mt, with the latest quote at around 10,150 yuan/mt.

Chrome-series raw material costs, high-carbon ferrochrome prices dropped back slightly this week. Although some ferrochrome producers recently reported maintenance and production cuts, and stainless steel production schedules for April remained high, leaving retail spot supply in the ferrochrome market relatively tight, stainless steel mills had built relatively ample ferrochrome raw material inventories earlier. Meanwhile, high port inventories of chrome ore recently caused some loosening in chrome ore spot prices. In addition, ferrochrome capacity has already reached a high level, the rainy season in south China is approaching, and ferrochrome producers outside China are resuming production. With ferrochrome producers lacking confidence in the outlook, ferrochrome prices still faced some downward pressure. As of this Friday, high-carbon ferrochrome prices in Inner Mongolia fell 25 yuan/mt (50% metal content) WoW to 8,625 yuan/mt (50% metal content).