Falling Finished Steel Prices Drive Down Stainless Steel Scrap Prices; Cost Advantages Fail to Offset Off-Season Pessimistic Sentiment [SMM Stainless Steel Scrap Market Weekly Review]

This week, the price of 304 stainless steel scrap off-cuts in east China declined and pulled back, with a quotation range of 10,450-10,550 yuan/mt; the price of the same grade of stainless steel scrap in Foshan pulled back simultaneously, in the range of 10,350-10,650 yuan/mt. From a raw material production cost perspective, the cost of producing stainless steel entirely using stainless steel scrap is about 14,640.79 yuan/mt, while the cost using only high-grade NPI reaches 15,072.29 yuan/mt, with the two still maintaining a favorable cost spread.

This week, stainless steel scrap prices declined and pulled back. During the week, SS stainless steel futures and SHFE nickel futures pulled back in tandem, with bearish sentiment in the futures market continuing to ferment. The bearish conditions transmitted to the spot market, dragging down spot prices of stainless steel finished products. Meanwhile, the price of the substitute raw material high-grade NPI also weakened simultaneously, forming a synchronized downward pattern across futures, finished products, and substitute raw materials, directly dragging down stainless steel scrap prices this week.

Overall, cost support struggled to offset multiple bearish pressures. The market is now in the traditional consumption off-season for stainless steel, with inherently weak end-use demand. Coupled with rising expectations for US Fed interest rate hikes and other macro uncertainties, overall market sentiment is relatively pessimistic, and downward pressure on raw material prices continued to intensify. Meanwhile, news of production cuts and maintenance at stainless steel mills came out frequently recently, further lowering market expectations for stainless steel scrap demand. Although stainless steel scrap still maintains a favorable cost advantage compared with high-grade NPI, providing some bottom support, under the resonance of multiple bearish factors—including weak off-season demand, pessimistic macro sentiment, and simultaneous weakness in futures and spot markets—overall market purchasing sentiment remains cautious, making it difficult to reverse the price decline trend. In the short term, the stainless steel scrap market is expected to remain under pressure.