[SMM Analysis] Weak Downstream Consumption Increases Pressure on Ex-China Steel Trading Price spread model, the price inversion of Chinese steel relative to overseas markets (India, Japan, Turkey, Black Sea) deepened further in late May. In particular, Chinese resources were cheaper compared to Indonesia, and the price spread was "narrowing at an accelerating pace." For pure ex-China inter-regional price spreads, India's decline was more pronounced compared to other regions, as weak domestic demand drove aggressive low-price bidding. Segment-wise, steel procurement sentiment in Southeast Asia became more cautious last week, with coil prices weakening. In Vietnam, coated steel and steel pipe prices began to slow down after a prolonged rally, and buyers became increasingly cautious about restocking ahead of the rainy season. Meanwhile, due to weak demand and growing pressure from low-priced imports, Formosa Ha Tinh Steel, a subsidiary of Taiwan's China Steel Corporation, also cut its HRC quotations by $5-10/mt to $598-603/mt CIF Vietnam. Although some Vietnamese downstream steel mills continued to raise or maintain prices due to earlier increases in raw material costs and tight spot supply, some producers had begun to limit orders or delay quotations while waiting for a clearer market direction. Notably, Indonesian HRC quotations remained competitive with relatively active exports, with FOB prices at around $565/mt. According to SMM survey, recent transaction prices to Vietnam were around $585/mt CFR. Turkey market: As the Middle East was set to enter a long holiday mid-week, most market participants had already exited early. According to SMM survey, no clear large-volume transactions were seen in the Turkish steel scrap market last week. Meanwhile, as domestic rebar demand remained sluggish, steel mills pushed their target purchase prices for European HMS 1&2 (80:20) scrap below $400/mt CFR to pass on the pressure. The recent euro depreciation and slight correction in ocean freight rates opened up some discount room for European sellers to a certain extent, but judging from actual market transactions, sellers still found it difficult to accept such low prices. At the same time, US exporters continued to hold prices firm at $420/mt CFR. In addition, mainstream quotations for Turkish domestic HRC remained at $660-675/mt EXW. Due to exchange rate fluctuations and high production costs, steel mills were striving to hold prices firm, but downstream buyers remained cautious in purchasing, with expected psychological prices 15-20 $/mt lower. Copyright and Intellectual Property Statement: This report is independently created or compiled by SMM Information & Technology Co., Ltd. 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[SMM Rare Earth Weekly Review: Rare Earth Prices Continued to Decline, Stopping Falling Near Weekend] The Pr-Nd oxide market remained in the doldrums overall this week. Affected by the continuous decline in futures prices, downstream metal plants were relatively cautious in procurement, and market trading remained sluggish. However, mid-week, driven by concentrated procurement from major downstream plants, market procurement volume recovered slightly, and suppliers raised their quotes again. As of today, Pr-Nd oxide prices fluctuated downward to 700,000-705,000 yuan/mt.

2025 annual reports show that companies with captive phosphate rock (BATIAN, Chuanjinnuo, Xingfa) posted profit growth of 122%-158%, while those relying on purchased raw materials (LiuGuo Chemical lost RMB 456 million, Lubei Chemical profit fell 85%) struggled. The pattern of "who owns mines, owns profits" is entrenched.

To date, the continuous decline of chrome ore prices has halted. Driven by a higher-than-expected increase in steel bidding prices, chrome ore prices have rebounded moderately.

[SMM Brass Billet News Flash] This week (4.17-4.23), the operating rate of the brass billet industry was 52.91%, down 0.77 percentage points WoW. Copper prices fluctuated at highs, and enterprises mostly relied on orders on hand to sustain operations, while new orders remained persistently weak. Meanwhile, recycled brass raw materials were in tight supply, and the price inversion phenomenon became prominent, putting significant cost pressure on the production side of billet producers. By product category, demand for high-precision products remained relatively stable, while shipments of standard-specification products slowed down, leading to a slight accumulation of finished product inventories at brass billet enterprises.

The operating rate of the brass billet industry was 52.91% this week (4.17-4.23), down 0.77 percentage points WoW. Copper prices continued to fluctuate at highs, and enterprises mainly relied on earlier orders on hand to sustain production, while new orders continued to weaken. Meanwhile, recycled brass raw materials supply remained tight, raw material prices were severely inverted, enterprises faced prominent cost pressure, and raw material inventories pulled back slightly to 4.2 days. Demand for high-precision and customized brass billet products remained relatively stable, while shipments of standard-specification products slowed down notably, and days of finished product inventories of sample enterprises edged up to 5.51 days. Looking ahead to next week (4.24-4.30), considering that copper prices remain at highs, new orders are weak, and raw material prices stay high, SMM expects the industry operating rate to further decline by 0.38 percentage points to 52.53%.

【SMM Copper Brief】The SHFE copper 2606 contract closed at 102,140 yuan/mt. Based on the BC copper 2605 contract at 90,770 yuan/mt, its after-tax price was 102,570 yuan/mt. The price spread between the SHFE copper 2606 contract and BC copper was -430, remaining inverted but narrowing compared to the previous day.

This week, stainless steel production costs showed a strengthening upward trend, while spot prices rose even more significantly. The cost-price inversion at stainless steel mills was repaired, and profits gradually recovered. Taking 304 cold-rolled products as an example, based on current raw material prices, the full cost profit margin reached 1.79% this week; calculated using inventory raw material costs, the profit margin was 1.99%. On the nickel-based raw material cost side, high-grade NPI prices showed a strengthening upward trend this week. Affected by the revision of Indonesia's nickel ore HMP, the market expected nickel ore costs to rise. Combined with the continued strengthening of SHFE nickel and SS futures, bullish expectations in the high-grade NPI market were strong. After downstream stainless steel mill profits recovered, their acceptance of high-priced raw materials improved, driving high-grade NPI quotes to stop falling and rebound. As of this Friday, mainstream high-grade NPI with 10-12% grade rose 10 yuan per nickel unit, closing at 1,090 yuan/nickel unit. Stainless steel scrap market side, stainless steel scrap prices rose sharply this week, driven by nickel ore cost increases and futures market linkage. The revision of nickel ore pricing pushed up cost expectations, and combined with the simultaneous rise in high-grade NPI, raw material linkage drove prices higher. Although the cost advantage of stainless steel scrap narrowed slightly, it remained attractive to steel enterprises, and market trading activity improved. Despite delayed payment issues dragging on trading pace, the market remained generally strong under futures-spot resonance and demand support, and was expected to consolidate at highs in the short term. As of this Friday, mainstream 304 off-cuts prices in Shanghai rose 200 yuan/mt, with the latest quote at approximately 10,350 yuan/mt. On the chrome-based raw material cost side, high-carbon ferrochrome prices continued their downward trend this week. Although stainless steel prices strengthened somewhat, procurement transactions in the high-carbon ferrochrome market remained sluggish recently. Earlier maintenance and production cut plans were insufficiently implemented, and current supply remained at a relatively high level. Meanwhile, recent declines in chrome ore and coke prices further weakened cost support, and rising nickel-based raw material costs also exerted some downward pressure on ferrochrome prices. As of this Friday, mainstream high-carbon ferrochrome prices in Inner Mongolia fell 75 yuan/mt (50% metal content) WoW, closing at 8,475 yuan/mt (50% metal content).

Stainless steel spot prices rose this week, but production costs pulled back somewhat, narrowing the degree of cost-price inversion for stainless steel mills. Taking 304 cold-rolled products as an example, based on same-day raw material prices, the full cost profit margin was -0.36% this week; calculated using inventory raw material costs, the margin was -0.83%. Nickel-based raw material costs: high-grade NPI prices remained in the doldrums this week. Stainless steel enterprises continued their earlier cautious purchasing strategy, and recent high-grade NPI transactions remained sluggish. Although high-grade NPI still had cost support, offer prices continued to edge lower under shipment pressure. As of this Friday, high-grade NPI with a grade of 10-12% fell 1.5 yuan per nickel unit, closing at 1,080 yuan/nickel unit. Stainless steel scrap market: stainless steel scrap prices remained generally stable this week. Although SS futures performed strongly, the transmission effect on stainless steel spot prices was limited, and scrap prices saw no significant boost. On the alternative raw material front, high-grade NPI was weak and ferrochrome prices declined, providing limited support for stainless steel scrap. The cost-effectiveness advantage of stainless steel scrap still existed, and rising stainless steel finished product prices also provided some support. However, strong cost pressure on steel mills, their strong desire to bargain down prices, and weak market demand collectively constrained price increases. Prices are expected to remain stable in the short term. As of this Friday, 304 off-cuts prices in Shanghai remained stable, with the latest quote at approximately 10,150 yuan/mt. Chromium-based raw material costs: high-carbon ferrochrome prices continued their downward trend this week. Although April stainless steel planned production remained at a high level, insufficient end-use demand support made it difficult for stainless steel prices to rise, which in turn weighed on market expectations. In addition, the production cut plans previously set by ferrochrome producers have had limited effect so far, and ferrochrome supply remained at a high level. Recent market transactions were overall sluggish, and producers had to slightly lower their offer prices under shipment pressure. As of this Friday, high-carbon ferrochrome prices in Inner Mongolia fell 75 yuan/mt (50% metal content) WoW, closing at 8,550 yuan/mt (50% metal content).

Platinum prices fluctuated upward today. The most-traded platinum contract PT2606 on the Guangzhou Futures Exchange closed the morning session at 539.15 yuan per gram, dropping slightly by 0.19%. For spot prices, platinum spot cargo against PT2606 was quoted at a discount of 0–4 yuan/gram. The sell side of the Gold Exchange's 1-PT2606 contract ended the price inversion, and spot discounts narrowed compared with the previous trading day, mainly due to the narrowing spread between domestic and overseas markets. In terms of spot transactions, according to SMM, just-in-time procurement by end-users was scarce. Some end-users reported that pre-holiday stockpiling for replenishment had been completed. Meanwhile, as investment enthusiasm cooled, overall market wait-and-see sentiment was strong before the holiday, and spot transactions were generally thin.