Stainless Steel Costs Edge Down While Spot Prices Hold Steady, Steel Mill Profits Rebound Slightly [SMM Analysis]

Stainless steel production costs edged down slightly this week, while prices remained generally stable, resulting in a slight expansion of steel mill profit margins. Using 304 cold-rolled as the calculation benchmark, the current raw material calculated profit margin was 2.33%, while the low-inventory raw material calculated profit margin reached 3.39%.

Nickel-based raw material costs: high-grade NPI prices edged up this week. Although the traditional consumption off-season for stainless steel is approaching, steel mills showed limited acceptance of high-priced raw materials, with cautious purchasing attitudes and mediocre performance in transactions. However, supported by tight supply expectations for high-grade NPI, the market showed a strong willingness to hold prices firm, and prices remained firm overall. As of this Friday, mainstream high-grade NPI with 10-12% grade rose 3 yuan per nickel unit, closing at 1,143.5 yuan/nickel unit.

Stainless steel scrap market: stainless steel scrap prices pulled back slightly this week. Although SS futures edged up, the driving effect was weak and difficult to transmit to the spot market; with the consumption off-season approaching, downstream purchasing attitudes were cautious, and finished product prices lacked upward momentum. The high-grade NPI rally slowed down with weak transactions, providing insufficient support from the raw material side; compounded by unresolved tight tax invoice issues and fermentation of rumors about steel mill production cuts in June, demand expectations weakened, and multiple bearish factors dragged down prices. However, stainless steel scrap still held an economic advantage over NPI, with the cost price spread providing a floor and limiting the decline. In the short term, constrained by tax invoice issues and weakening off-season demand, prices are expected to remain relatively stable going forward. As of this Friday, mainstream 304 off-cuts prices in Shanghai fell 100 yuan/mt, with the latest quote at approximately 10,350 yuan/mt.

Chrome-based raw material costs: high-carbon ferrochrome prices remained stable this week. Although chrome ore port inventory continued to climb, breaking through historical peaks, the market questioned the support from subsequent ferrochrome costs. Moreover, ferrochrome production was already at high levels with new capacity yet to be released within the year, and market confidence in prices staying high was insufficient. However, current stainless steel production schedules remained at relatively high levels, maintaining stable demand for ferrochrome. Combined with the support from flat June steel mill tender prices, high-carbon ferrochrome prices remained stable recently. As of this Friday, mainstream high-carbon ferrochrome prices in Inner Mongolia stayed flat WoW, closing at 8,325 yuan/mt (50% metal content).