Stainless Steel Futures Strengthened, Driving Prices and Costs Up Simultaneously, Steel Mill Profits Narrowed Slightly [SMM Analysis]

This week, stainless steel spot prices and production costs strengthened in tandem, with stainless steel mill smelting profits narrowing slightly. Taking 304 cold-rolled products as an example, based on current raw material prices, the full cost profit margin was 2.9% this week; calculated using inventory raw material costs, the profit margin reached 6.03%.

Cost side for nickel-based raw materials, high-grade NPI prices continued to rise sharply this week. Driven by the strengthening of SS contracts, high-grade NPI prices surged after the Labour Day holiday. Although futures subsequently pulled back, strong price-holding willingness persisted in the market, supported by high stainless steel production schedules, robust demand, and NPI's own cost support, keeping prices firm. As of this Friday, mainstream high-grade NPI with 10-12% grade rose 16 yuan per nickel unit to close at 1,151 yuan/nickel unit.

Stainless steel scrap market, stainless steel scrap prices continued to hold up well this week. Post-holiday geopolitical news drove futures to retreat after rapid rise, but stainless steel spot cargo performed firmly, coupled with high-grade NPI rising in tandem, providing strong cost support. The core driver was that steel mill profits remained moderate with high production schedules, sustaining rigid raw material demand; moreover, steel scrap still held significant cost advantages over NPI, boosting purchase willingness. Although tight tax invoices constrained trader cash flow, bullish sentiment was strong in the market, and scrap prices are expected to hold up well in the near term. As of this Friday, mainstream 304 off-cuts prices in Shanghai rose 250 yuan/mt, with the latest quote at approximately 10,850 yuan/mt.

Cost side for chromium-based raw materials, high-carbon ferrochrome prices pulled back slightly overall this week. Although major stainless steel mills raised their steel tender prices for high-carbon ferrochrome in May, ferrochrome planned production remained at high levels. Additionally, south China was gradually entering the normal/rainy season, and ex-China ferrochrome producers were about to resume production, leading to relatively loose ferrochrome supply expectations. Recent ferrochrome transactions were sluggish, and chrome ore inventory reached a multi-year high, with chrome ore prices softening and ferrochrome cost support weakening, leaving prices in the doldrums. As of this Friday, mainstream high-carbon ferrochrome prices in Inner Mongolia fell 25 yuan/mt (50% metal content) WoW to close at 8,450 yuan/mt (50% metal content).