[NPI Daily Review] Supply Contraction Expectations Provide Support, Downstream Weakness Drags Down NPI Prices

SMM May 20,

   On May 20, the SMM high-grade NPI market sentiment index was 2.61, down 0.05 MoM, the high-grade NPI upstream sentiment index was 3.1, down 0.06 MoM, and the high-grade NPI downstream sentiment index was 2.12, down 0.04 MoM. Today, the high-grade NPI market saw a pronounced tug-of-war between longs and shorts, with prices moving sideways. Supply side, spot cargo from top-tier players gradually tightened, resource grades declined, and combined with rising expectations of production cuts and production switches within the industry, the inflow of Indonesian supplies showed a shrinking trend. Market expectations of tight supply were strong, traders showed weak willingness to sell at low prices, and sellers' overall mentality to hold prices firm remained solid. Demand side, dragged down by the continued decline in stainless steel finished product prices, steel mills became increasingly cautious in procurement, maintaining only rigid-demand restocking pace. Their psychological price levels were generally low, with a notable price spread from upstream offers. Market transactions were mostly concentrated in the lower range, and high-priced cargo faced circulation difficulties. Overall, supply contraction expectations provided bottom support for prices, but downward pressure from the weakening downstream industry persisted. In the short term, NPI prices are expected to continue moving sideways, and close attention still needs to be paid to the progress of production cuts implementation and changes in the stainless steel market.