Macro Sentiment Suppressed Futures, Stainless Steel Profits Narrowed Amid Raw Material Divergence [SMM Analysis]

Stainless steel production costs pulled back this week, and steel mill profits narrowed, with profit divergence driven by different raw material inventory costs. Using 304 cold-rolled as the calculation benchmark, the profit margin based on current raw material costs was 1.87%, while the profit margin based on low-level inventory raw material costs was 4.48%. Overall industry profitability was moderate, steel mills maintained high production schedules, and operating rates remained stable.

Nickel-based raw material costs, nickel-based raw material prices were under pressure this week, largely driven by futures sentiment. SHFE nickel and stainless steel futures declined consecutively, dragging high-grade NPI spot prices down in tandem. However, cost support in the NPI industry remained strong, with widespread firm-pricing sentiment across the market. Additionally, high-grade NPI sources were scarce within the industry, creating structural price divergence — high-grade NPI with grades above 12% held firm. As of this Friday, mainstream 10-12% grade high-grade NPI fell 6 yuan per nickel unit to 1,145 yuan/nickel unit.

Stainless steel scrap market, stainless steel scrap prices pulled back this week. SS futures trended weaker, dragging spot prices lower in tandem; although high-grade NPI also declined, the drop was limited, highlighting the cost advantage of stainless steel scrap. Steel mill smelting profits were moderate, production schedules stayed high, and procurement demand remained solid. The overall pattern was "weak futures, resilient raw materials, demand underpinning," and prices are expected to hold firm in the near term 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 10,650 yuan/mt.

High-carbon ferrochrome prices pulled back slightly this week, as bearish factors in the industry emerged in concentration. Supply side, China's ferrochrome production continued to stay high, and south China gradually entered the parity and rainy season, with lower hydropower costs supporting production. Raw material side, chrome ore inventory at ports was at historical highs, traders faced significant shipment pressure and proactively offered concessions to move cargo, while ex-China chrome ore futures prices declined, further weakening ferrochrome cost support. Market sentiment, the industry lacked confidence in the outlook, downstream transactions were sluggish, dragging ferrochrome prices steadily lower. As of this Friday, mainstream high-carbon ferrochrome prices in Inner Mongolia fell 25 yuan/mt (50% metal content) WoW to 8,375 yuan/mt (50% metal content).