SMM China July Stainless Steel Production and August Forecast

According to the SMM survey, China's stainless steel production in July 2024 was approximately 3.1838 million mt, down 1.44% MoM and 2.13% YoY. Among this, 200-series stainless steel production was 921,000 mt, up 0.52% MoM; 300-series stainless steel production was 1.5918 million mt, down 3.23% MoM; and 400-series stainless steel production was 671,000 mt, down 0.28% MoM.

In July, due to the impact of high temperatures, downstream operating rates significantly declined, leading to weakened demand for stainless steel and prompting steel mills to reduce production. Some stainless steel mills in East China and South China initiated maintenance plans, affecting approximately 21,000 mt of 200-series stainless steel production and 48,000 mt of 300-series stainless steel. It is noteworthy that state-owned and private stainless steel mills adopted different production strategies during the industry off-season. Amid the traditional weak demand, FeNi supply was tight while high-grade NPI prices ran strong, putting pressure on 300-series stainless steel prices and causing continuous profit shrinkage. Some private stainless steel mills shifted 300-series capacity to 200 and 400-series to reduce losses; state-owned stainless steel mills saw a decline in 200 and 400-series stainless steel production but maintained stable 300-series stainless steel production. This resulted in an overall reduction in 300-series stainless steel production while 200 and 400-series stainless steel production held flat, or even 200-series stainless steel production slightly increased.

Entering August, due to demand expectations in the traditional peak season of "Golden September and Silver October", stainless steel mills still chose to increase production in preparation for September. From the perspective of scheduled production, 300-series stainless steel production is expected to increase by about 80,000 mt in August, up 5.16% MoM, while 200 and 400-series stainless steel production is expected to decrease by 2.3% MoM and 4.92% MoM respectively due to inventory backlog and continuous price decline. From the perspective of agent orders, August orders are currently not ideal, with no stockpiling plans from downstream in advance. Since the beginning of August, high-grade NPI transaction prices have risen above 1,000 yuan/mtu. With stainless steel prices difficult to rise and expected losses, the increase in production still faces certain challenges.