The social inventory of stainless steel decreased by 1.02% WoW, despite a sharp reduction in warrants, the actual available resources remained ample [SMM Analysis]

As of July 25, the total social inventory of SMM stainless steel was 976,800 mt, up 0.54% MoM but down 1.02% WoW. Among them, the inventory of 200-series stainless steel was 276,000 mt, down 0.35% WoW; the inventory of 300-series stainless steel was 558,700 mt, down 1.32% WoW; and the inventory of 400-series stainless steel was 142,100 mt, down 1.11% WoW.

200 series: Last week, the arrivals of the 200-series stainless steel decreased from a week ago, mainly from Chengde and other origins, but CRC from Hongwang remained at a high level. Meanwhile, downstream demand was relatively weak recently, resulting in a slight accumulation of CRC inventory last week. In Wuxi, CRC inventory accumulated, while HRC arrivals were low and inventory dropped by 1.45% WoW due to rigid demand. In Foshan, CRC inventory dropped by 0.39% WoW, and HRC inventory fell by 1.24% WoW.

300 series: Last week, overall arrivals in Wuxi were low, mainly due to a significant reduction in shipments from a large steel mill in South China, primarily in CRC. However, this steel mill had previously moved warrants out and sold them as spot goods through agents, so the actual available cold-rolled resources were ample last week. Spot prices stabilized and began to recover, with a significant increase in HRC demand due to rigid procurement needs. In Wuxi, CRC inventory dropped by 1.4% WoW, and HRC stocks fell by 2.55% WoW. In Foshan, HRC arrivals were high, mainly due to a stainless steel mill in East China fulfilling overdue orders. CRC inventory dropped by 1.05% WoW in Foshan, while HRC inventory accumulated by 1.27% WoW.

400 series: As concentrated arrivals of 400-series stainless steel ended two weeks ago, the overall arrivals decreased last week. In addition, with the recent decline in the cost of high-carbon ferrochrome and plain carbon steel scrap from steel mills, actual transaction prices fell, promoting an increase in procurement demand. This week, 400-series stainless steel inventory in Wuxi dropped by 1.08% WoW, and in Foshan, it fell by 0.92% WoW.

Additionally, it is worthy of attention that a stainless steel mill in East China recently applied for bankruptcy, but this did not affect its normal production lines. Recently, there have been many supplementary shipments, but overall arrivals are expected to decrease in the future. Although warrant inventory has significantly reduced, the overall available resources remain at a high level. With downstream demand maintaining a seasonal low, the future destocking speed is still not optimistic.