[SMM Nickel Flash] March 16 News: Supply side, upstream cost support still remained. Demand side, downstream spot order procurement mainly focused on cargoes with higher nickel units. Amid declining stainless steel prices, downstream psychological price levels showed a downward trend. Overall, the stage of back-and-forth negotiations between upstream and downstream had not yet ended, and high-grade NPI prices were capped by finished stainless steel products on the upside.

Spanish stainless steel producer Acerinox has partnered with German industrial group Jeremias Group to launch the Blueline product line, touted as the world’s first low-emission chimney and smoke-extraction duct system. Designed to support the decarbonization of the construction sector, the system is manufactured using Acerinox’s EcoACX® sustainable stainless steel, which is produced with 100% renewable energy. The Blueline system incorporates over 90% recycled material, achieving at least a 50% reduction in its carbon footprint compared to conventional materials, highlighting a significant step toward integrating low-carbon stainless steel products into sustainable building infrastructure.

[SMM Nickel Flash] On March 2, from the supply side, most upstream quotes remained flat MoM, with the bottom still supported by costs. From the demand side, as the Lantern Festival has not yet passed, there has been no significant release of procurement demand downstream, and the market only saw a small amount of restocking for essential needs. Overall, trading volume remains low, and the gap between upstream and downstream is gradually narrowing, but the market is still waiting to see the sales situation of finished stainless steel products after the Lantern Festival.

【SMM Stainless Steel Update】China’s National Intellectual Property Administration shows that Rui’an Qinghui Stainless Steel Products Co., Ltd. has been granted a patent for a “Stainless Steel Nut Feeding Device” (Publication No. CN223254375U, filed November 2024). The device features a storage bin, transition chamber, feeding track, as well as cut-off, buffering, and soundproofing designs, ensuring safe and stable operation of the feeding process while reducing noise and improving production efficiency.

SMM data shows that the most-traded SS contract declined this week. As of 10:30 on June 13, the SS2508 contract was quoted at 12,540 yuan/mt, down 160 yuan/mt WoW. Macro front, on June 11, China and the US held the second round of economic and trade consultations in London, reaching a framework agreement in principle and broadening the scope for future cooperation. This alleviated market concerns about escalating trade frictions and injected positive sentiment into the stainless steel futures market in the short term. The US CPI rose 2.4% YoY in May, below the expected 2.5%, raising expectations for US Fed interest rate cuts within the year. The US dollar index came under pressure, providing support for nickel, stainless steel, and other commodity prices. During the week, the National Development and Reform Commission (NDRC) proposed establishing new-type policy-based financial instruments to facilitate the implementation of major engineering projects in people's livelihoods, which is expected to drive effective investment exceeding 6 trillion yuan and stimulate demand and application for stainless steel in infrastructure and other sectors. However, on June 12, the US Department of Commerce announced new tariffs on common household appliances made of steel components, such as washing machines and dishwashers, limiting the export consumption of downstream stainless steel products and exerting a negative impact on the market. Fundamentally, under the influence of the traditional consumption off-season, the stainless steel market has gradually shown signs of weak demand, with upstream stainless steel mills, agents, and traders generally facing increased pressure to ship goods. Driven by losses, stainless steel mills implemented price-capping strategies for downstream selling prices. Despite successive price reductions in the early stage, transaction volumes failed to improve. During the week, due to high finished product inventories, steel mills temporarily canceled the price-capping policy, leading to a rapid decline in stainless steel prices. Although the price-capping policy was subsequently reinstated, stainless steel quotes remained at low levels. Overall, the mismatch between weak stainless steel market consumption and relatively high steel production has intensified. Although the SS futures market hit a new five-year low during the week, the lack of upward rebound momentum amid market pessimism means that the SS futures market will continue to fluctuate at lows.

This week, the stainless steel market saw a pattern where production costs and spot prices declined in tandem. Despite a slight increase in the price of high-grade NPI, the prices of high-carbon ferrochrome and stainless steel scrap both weakened. Coupled with persistently sluggish downstream demand, the selling prices of stainless steel products came under pressure, exacerbating corporate losses. Taking 304 cold-rolled products as an example, based on the raw material prices of the day, the cash cost decreased by 36.24 yuan/mt this week, and the loss ratio widened to 5.89%. If calculated based on the cost of raw material inventory, although the cash cost decreased by 109.29 yuan/mt, the loss ratio remained at 5%. At the cost level of nickel-based raw materials, nickel ore prices remained firm this week, providing solid cost support for high-grade NPI prices, prompting a slight increase in high-grade NPI prices during the week. However, recent news of production cuts by stainless steel mills has been circulating, and the market expects the demand for high-grade NPI to weaken accordingly. Meanwhile, stainless steel enterprises are generally facing losses, with low purchase willingness for high-priced raw materials, further limiting the upside potential for high-grade NPI prices. As of Friday, the price of high-grade NPI with 10-12% grade had increased by 3 yuan/mtu cumulatively, closing at 954 yuan/mtu. In the stainless steel scrap market, prices fell slightly in tandem with stainless steel finished product prices. Compared with high-grade NPI, stainless steel scrap remains at a significant disadvantage in terms of cost-effectiveness. Affected by expectations of stainless steel production cuts, market confidence was shaken, and suppliers' willingness to sell was strong, driving stainless steel scrap prices to continue to weaken. As of Friday, the price of 304 off-cuts in east China had fallen by 100 yuan/mt cumulatively, with the quoted price dropping to 9,850 yuan/mt. In the cost sector of chrome-based raw materials, despite Tsingshan Group maintaining a flat tender price for high-carbon ferrochrome at its steel mills in June, the market's supply-demand pattern is undergoing significant changes. On the one hand, the stainless steel industry expects production cuts, weakening the demand for high-carbon ferrochrome. On the other hand, high-carbon ferrochrome producers are showing a trend of expanding production, effectively alleviating the previously tight supply situation. Although overseas ferrochrome production is expected to decline, domestic high-carbon ferrochrome producers, leveraging the advantage of low-priced chrome ore raw materials purchased earlier, are highly motivated to produce, driving the ferrochrome market from undersupply to oversupply. With the increasing abundance of spot resources in the market, the willingness of ferrochrome producers and traders to sell has significantly increased. Against the backdrop of a reversal in the supply-demand relationship, high-carbon ferrochrome prices have entered a downward trajectory. Data shows that high-carbon ferrochrome in Inner Mongolia fell by 100 yuan/50 base tons this week, with the latest quoted price at 7,950 yuan/50 base tons. A comprehensive analysis reveals that the current cost support for stainless steel prices is limited, and the core contradiction in the market still centers on the persistent weakness in downstream demand. Recently, some stainless steel enterprises have successively implemented production cuts due to multiple factors such as losses, insufficient orders, and equipment maintenance and upgrades. However, there remains significant uncertainty as to whether the scale of production cuts can match the extent of demand contraction. Against the backdrop of an escalating tug-of-war between sellers and buyers, stainless steel enterprises are expected to face a prolonged period and numerous challenges in their efforts to restore profits.

[SMM News] SMM reported on May 26 that according to Arslan Küçükemre, Chairman of the Turkish Stainless Steel Industry and Business Association (PASID), the ongoing anti-dumping investigation into stainless steel products imported from China and Indonesia, along with the increase in related tariffs from 8% to 12%, is hanging like a "Sword of Damocles" over the industry. The outcome of this investigation has clearly become a "make-or-break" test for the Turkish stainless steel industry. Küçükemre stated that the results of the anti-dumping investigation, expected to be announced in August or September this year, will largely determine the future direction of the industry.

This week, the stainless steel market saw a simultaneous decline in production costs and spot prices. However, the drop in costs was smaller than that in spot prices, exacerbating the losses between production costs and selling prices. Taking 304 cold-rolled stainless steel as an example, based on the raw material prices of the day, the cash cost only increased slightly by 11.71 yuan/mt this week, with the loss ratio expanding to 5.77%. If calculated based on raw material inventory costs, although the cash cost decreased by 130.82 yuan/mt, the loss ratio still reached 5.43%. Regarding the cost of nickel-based raw materials, the price of high-grade NPI had already fallen below the smelting cost line in Indonesia in the early stage, leaving limited room for further significant price reductions. Additionally, as Indonesia gradually enters the rainy season, the tight supply of nickel ore may intensify. Despite the fact that the loose supply situation of high-grade NPI is unlikely to change completely in the short term, driven by cost support and the demand for some traders to stock up at low prices, the price of high-grade NPI stopped falling and began to rebound this week. As of Friday, the price of high-grade NPI with a grade of 10-12% had increased by a cumulative 9.5 yuan/mtu, reaching 951 yuan/mtu. During the same period, the price of stainless steel scrap dropped slightly along with the price of finished stainless steel products. Compared with high-grade NPI, its economic efficiency was clearly at a disadvantage, with downstream purchase willingness remaining low and mainly driven by immediate needs. As of Friday, the price of 304 off-cuts in east China had fallen by a cumulative 50 yuan/mt, with the quoted price dropping to 9,950 yuan/mt. In terms of the cost of chrome-based raw materials, the high-carbon ferrochrome tender price for June announced by Tsingshan Group was 8,095 yuan per 50 base tons, unchanged from the previous month, in line with market expectations. During the week, the retail spot price of ferrochrome continued to decline, gradually approaching the tender price. Currently, the retail price of high-carbon ferrochrome in Inner Mongolia is basically in line with the tender price. As south China enters the rainy season, the operating rate of ferrochrome enterprises has increased, leading to a significant rise in market supply and abundant spot cargo availability. Against the backdrop of the off-season for stainless steel consumption, losses in stainless steel enterprises, and planned production cuts, ferrochrome prices are expected to remain weak. Data shows that the price of high-carbon ferrochrome in Inner Mongolia fell by 25 yuan per 50 base tons this week, with the latest quoted price at 8,050 yuan per 50 base tons. Overall, as the impact of macro factors on the stainless steel market gradually fades, the imbalance caused by insufficient demand has become increasingly prominent. Although stainless steel enterprises continue to face pressure from losses, relying solely on cost support is insufficient to reverse the weak market trend. Currently, news of production cuts by stainless steel mills has emerged in the market. Given the already ample supply of high-grade NPI and high-carbon ferrochrome, it is expected that the smelting cost of stainless steel will further decline.

This week, the price of 304 stainless steel scrap off-cuts in east China rose to 9,950-10,050 yuan/mt. In Foshan, the price of 304 stainless steel scrap off-cuts held steady at 9,650-9,950 yuan/mt. Currently, when calculated by raw material, the production cost of stainless steel produced entirely from stainless steel scrap is approximately 13,831.58 yuan/mt, while the production cost of stainless steel produced entirely from high-grade NPI is approximately 13,416.71 yuan/mt. This week, the tax-exclusive purchase price of 304 molten steel at a steel mill in south China was 9,330 yuan/mt, up 270 yuan/mt from the previous period, which is equivalent to a tax-inclusive price of approximately 1,006 yuan/mtu for high-grade NPI. This week, despite the continued downward trend in the prices of high-grade NPI and high-carbon ferrochrome, the spot price of finished stainless steel products strengthened significantly, driven by favourable macro policies. The price of stainless steel scrap also followed suit and increased. Market confidence was boosted by the favourable policies. Additionally, the supply of stainless steel scrap in the market was tight, prompting some traders to choose to hold back their inventory and stand firm on quotes, further supporting the upward price trend. However, compared to high-grade NPI, the economic efficiency of stainless steel scrap has clearly become less competitive. As the impact of favourable macro policies gradually fades, the price of finished stainless steel products has begun to weaken. Coupled with the continuous decline in the prices of raw materials such as high-grade NPI and high-carbon ferrochrome, the price of stainless steel scrap is expected to struggle to maintain its strong performance under the dual pressures of cost disadvantages and weak demand.

This week, the average price of SMM 8-12% high-nickel pig iron is 950.1 RMB per nickel point (tax-included, ex-factory), which represents a decrease of 17.4 RMB per nickel point compared to the average price last week. The price of high-nickel pig iron continues its previous downward trend.