Futures Strengthened and Drove Spot Prices Up, Stainless Steel Mill Profits Expanded [SMM Analysis]

This week, stainless steel spot prices and production costs both strengthened, with stainless steel mill smelting profits further expanding. Taking 304 cold-rolled products as an example, calculated based on same-day raw material prices, the full cost profit margin reached 3.15% this week; if calculated based on inventory raw material costs, the profit margin was 5.41%.

Nickel-based raw material costs: high-grade NPI prices rose sharply this week. Affected by geopolitical conflicts in the Middle East, sulfur supply tightened, driving SHFE nickel prices up significantly; combined with news related to Indonesian nickel ore, bullish expectations for high-grade NPI prices further strengthened. Recently, stainless steel mills have returned to profitability, increasing their acceptance of high-priced raw materials and enhancing procurement enthusiasm, pushing high-grade NPI prices up sharply within the week. As of this Friday, mainstream 10-12% grade high-grade NPI rose 38 yuan per nickel unit to 1,135 yuan/nickel unit.

Stainless steel scrap market: stainless steel scrap prices further strengthened this week. SS futures surged, driven by SHFE nickel's spike triggered by geopolitical conflicts; this transmitted to the spot market, with stainless steel and alternative raw material high-grade NPI rising in tandem, boosting bullish sentiment. The rapid rise in high-grade NPI prices further highlighted the cost-effectiveness advantage of stainless steel scrap. Despite ongoing tax invoice issues, steel mills' preference for using scrap remained unchanged; combined with profit recovery and production schedules staying high, procurement demand was robust, providing strong price support. The overall pattern was "futures leading, raw materials moving in tandem, demand supporting," with tax invoice issues not significantly constraining the uptrend. Stainless steel scrap prices are expected to hold up well in the near term. As of this Friday, mainstream 304 off-cuts prices in Shanghai rose 200 yuan/mt, with the latest quote at approximately 10,600 yuan/mt.

Chromium-based raw material costs: high-carbon ferrochrome prices remained generally stable this week. During the week, Tsingshan announced its May steel mill tender price for high-carbon ferrochrome, up 100 yuan/mt (50% metal content) MoM, further boosting ferrochrome market confidence; additionally, with stainless steel prices continuing to rise recently and production schedule expectations staying high, ferrochrome demand was unlikely to pull back significantly. However, ferrochrome production schedules remained at high levels, recent retail market transactions were sluggish, and market entities mostly adopted a cautious wait-and-see attitude, keeping prices relatively stable. As of this Friday, mainstream high-carbon ferrochrome prices in Inner Mongolia held steady WoW at 8,475 yuan/mt (50% metal content).