Raw Material Prices Saw Slight Correction, Stainless Steel Mill Profits Expanded [SMM Analysis]

This week, both stainless steel production costs and prices pulled back slightly, leading to some expansion in steel mill profits. Using 304 cold-rolled as the calculation benchmark, the current raw material-based profit margin was 2.19%, while the low-level inventory raw material-based profit margin reached 3.67%. Overall industry profitability was moderate, and steel mills therefore maintained high production schedules.

On the nickel-based raw material cost side, high-grade NPI prices first declined then rose this week, showing an overall slight pullback. During the week, news emerged that Indonesia planned to unify ferroalloy exports under state-owned enterprise operations. Although stainless steel scrap still held a notable cost advantage and steel mills had a strong desire to bargain down prices, supply uncertainty fueled a strong market sentiment to hold prices firm and hold back from selling, and prices ultimately stopped falling and stabilized. As of this Friday, mainstream 10-12% grade high-grade NPI fell 4.5 yuan per nickel unit, closing at 1,140.5 yuan/nickel unit.

On the stainless steel scrap market side, prices pulled back this week. Prices declined under the combined impact of multiple bearish factors, including weak spot cargo performance in finished products, steel mills pushing for lower raw material prices, and downward adjustments to molten steel quotes. However, the decline was limited for the following reasons: the tight tax invoice situation was expected to ease, trading pain points were gradually being resolved, and steel mill purchase expectations rose accordingly; furthermore, steel scrap held a greater cost advantage over NPI, and combined with steel mills still being profitable and rigid demand remaining robust, prices were effectively supported. The overall pattern showed "weakening spot, cost support, recovering expectations," and short-term prices were expected to fluctuate in tandem with finished products, with limited downside room. As of this Friday, mainstream 304 off-cuts prices in Shanghai fell 200 yuan/mt, with the latest quote at approximately 10,450 yuan/mt.

On the chromium-based raw material cost side, high-carbon ferrochrome prices pulled back slightly this week. Although market confidence in ferrochrome was insufficient recently, with overall weak transactions, high chrome ore inventory levels, and continued declines in overseas market chrome ore futures prices weakening ferrochrome cost support, market expectations for the June steel mill tender price for high-carbon ferrochrome from major stainless steel mills leaned cautious. On Friday, TISCO and Tsingshan successively announced their June steel mill tender prices for high-carbon ferrochrome, both unchanged from the previous month, which somewhat boosted market confidence. As of this Friday, mainstream high-carbon ferrochrome prices in Inner Mongolia fell 50 yuan/mt (50% metal content) WoW, closing at 8,325 yuan/mt (50% metal content).