Weak Futures Dragged Down Stainless Steel Scrap, Cost Advantages Underpinned the Market [SMM Stainless Steel Scrap Market Weekly Review]

This week, prices of 304 stainless steel scrap off-cuts in east China pulled back, with a quotation range of 10,600-10,700 yuan/mt; prices of the same-specification stainless steel scrap off-cuts in Foshan remained stable, with a price range of 10,400-10,700 yuan/mt. From a raw material cost analysis perspective, the current cost of producing stainless steel entirely from stainless steel scrap was approximately 14,821.71 yuan/mt, while the production cost using entirely high-grade NPI reached 15,173.94 yuan/mt.

Stainless steel scrap prices declined and pulled back this week. SS futures were overall in the doldrums, with futures continuously under pressure, which in turn transmitted to the spot market, driving spot stainless steel finished product prices to pull back in tandem. The alternative raw material high-grade NPI also declined simultaneously, but its own raw material fundamentals remained relatively firm, with limited price declines. During the current downward movement in stainless steel spot prices, steel mills still maintained certain smelting profits, production willingness stayed high, and steel mill production schedules showed no reduction. Meanwhile, with limited declines in high-grade NPI, the cost-effectiveness advantage of stainless steel scrap over high-grade NPI became more pronounced during the week. Even though industry tax invoice issues persisted, they did not affect steel mills' procurement pace, and purchasing demand for stainless steel scrap with better cost-effectiveness remained robust. Overall, the stainless steel scrap market this week exhibited a pullback pattern characterized by "weak futures, resilient raw materials, and demand underpinning." Bearish futures dominated the short-term trend, but rigid demand and cost price spread advantages formed strong support. Although tax invoice issues persisted, they did not amplify downward pressure. Stainless steel scrap prices were expected to remain relatively firm in the near term, with limited downside room.