China High-carbon ferrochrome Output In September And Forecast For October

According to SMM survey, the domestic stainless steel output totalled 3.222 million mt in September, up 0.47% MoM and 16.76% YoY. The output of 200-series stainless steel fell 0.42% MoM to 952,000 mt, 300-series dropped 1.14% MoM to 1.644 million mt, and 400-series hiked by 7.38% MoM to 626,000 mt.

In early September, with a big bulge in stainless steel prices amid Indonesia’s delay in issuance of nickel ore quotas, stainless steel plants carrying high expectations for a peak season scheduled high production. Therefore, high production remained for several consecutive months. However, actual demand was weak in September. Under such circumstance, spot supply overhang occurred, tipping spot prices into a rapid drop. Robust nickel raw material prices were reported. Therefore, loss-making stainless steel mills turned to maintenance and production cuts. In addition, owing to heavy rains and other unexpected reasons at some South China-based mills, the actual production in September was about 100,000 mt less than the original schedule, with most of the reduction being 300 series stainless steel. Underpinned by normal operating rate of downstream sectors amid stable industrial demand, 400 series stainless steel production mounted, in spite of rising nickel raw material prices.

In October, in-plant and social inventory will remain high. Furthermore, demand sluggishness and limited downward space for high-grade NPI prices will lead to prolonged stainless steel price erosions before and after the Mid-Autumn Festival and the National Day holiday, leaving agents with weak willingness to pick up goods. Therefore, stainless steel mills will suffer serious losses. One leading stainless steel mill in East China may take the lead in reducing production. And more production cutbacks of stainless steel plants are expected to be monitored.