Bearish Factors Converge as Stainless Steel Scrap Weakens, Cost Advantages Stabilize Price Floor [SMM Stainless Steel Scrap Market Weekly Review]

This week, prices of 304 stainless steel scrap off-cuts in east China pulled back, with the quotation range at 10,400-10,500 yuan/mt; stainless steel scrap off-cuts of the same specification in Foshan weakened, with the price range at 10,150-10,450 yuan/mt. From the perspective of raw material production cost analysis, the cost of producing stainless steel entirely from stainless steel scrap was approximately 14,580.48 yuan/mt, while the production cost using entirely high-grade NPI reached 15,125.2 yuan/mt.

Stainless steel scrap prices declined and pulled back this week. The spot market for stainless steel finished products was overall in the doldrums, with spot prices continuously under pressure, while steel mills continued to push for lower prices on the alternative raw material high-grade NPI. The overall sentiment on the raw material side was bearish. Combined with mainstream steel mills lowering their molten steel quotations during the week, multiple bearish factors resonated, driving stainless steel scrap prices to further pull back this week. Supporting factors cushioning the decline in stainless steel scrap were clearly visible: positive news emerged in the market this week that the issues of reverse invoicing and tight tax invoices might be eased, with industry transaction pain points expected to be alleviated, and steel mills' purchase demand for stainless steel scrap is expected to increase going forward. Meanwhile, stainless steel scrap continued to maintain a favorable cost-effectiveness advantage over high-grade NPI. Coupled with the fact that steel mills still had profit margins on the production side, production and procurement enthusiasm was ensured, and overall rigid demand remained robust, continuously providing bottom support for stainless steel scrap prices. Overall, the stainless steel scrap market this week exhibited a pullback pattern characterized by "weakening spot prices, cost underpinning, and recovering expectations." Spot finished product price changes dominated the short-term trend of stainless steel scrap, with bearish signals from futures and spot cargo pushing prices down. However, the cost-effectiveness advantage, rigid demand from steel mills, and expectations of tax invoice policy relaxation effectively limited the downside. Stainless steel scrap prices are expected to fluctuate in tandem with stainless steel finished products in the short term, with limited overall downside room.