According to the price monitoring of SunSirs, stainless steel prices fluctuated widely in July. As of the end of July, the spot price of stainless steel was 13,448.33 RMB/ton, a decrease of 0.25% from 13,481.67 RMB/ton at the beginning of the month and a year-on-year increase of 10.88%.
According to the annual price comparison data of stainless steel from SunSirs in the past five years, most of the stainless steel prices remained firm in August, mainly due to the frequent maintenance of steel mills in August.
Raw material
The nickel series fluctuated widely, with London nickel at 16,000-17,000 US dollars per ton and Shanghai nickel at 125,000-132,000 RMB/ton. The core driving force came from Indonesia's RKAB quota, which was compressed from 379 million wet tons to about 270 million tons. July is the supplementary quota application period, and the high-speed nickel railway operates at 1,140-1,160 RMB per nickel. The center of gravity of the chromium series has shifted downwards, with production reaching a new high this year and South African mines continuing to arrive at the port. Supply has been fully relaxed, and mainstream steel mills have lowered their bids by 100-200 RMB/50 basis tons, resulting in a stalemate in transactions. Molybdenum iron has maintained a high level for nearly three years, and molybdenum containing varieties such as 316L have significantly stronger resistance to decline than 304 series.
Supply side:
From January to June, the domestic stainless steel crude steel production was 21.079 million tons, a year-on-year increase of 7.19%; The estimated production for July is 3.5694 million tons, with a month on month increase of 1.02% and a year-on-year increase of 11.17%, indicating that the supply pressure will not decrease. The production schedule of the 300 series decreased by about 5.5% month on month to 1.86-1.87 million tons, and steel mills took the initiative to control production; The 200 series saw a significant increase of 120,000 tons to 1.057 million tons compared to the previous period, while the 400 series increased to 678,000 tons. Excess production capacity has been transferred to the 200 and 400 series. Cold rolling production is expected to reach 1.4405 million tons, a decrease of 1.63% compared to the previous period. Starting from mid July, the distribution of goods by East China Steel Plant has decreased, resulting in tight cold rolling resources.
On the demand side:
July is the traditional off-season for consumption, and the southern rainy season delays outdoor construction progress. Orders for home appliances, kitchenware, and hardware have significantly shrunk, and downstream only maintains sporadic purchases for essential needs. The daily shipment volume of traders has significantly contracted compared to the peak season. Real estate continues to drag down hot rolling demand, with a year-on-year increase of 11.60% in the sales area of commercial housing from January to June; Cold rolling in the home appliance industry is relatively stable, with refrigerator production increasing by 28% year-on-year. The overseas summer break in July and August, coupled with rising sea freight rates, has put pressure on export orders. Traders and end-users have a strong wait-and-see attitude, and procurement is generally carried out on demand.
Stainless steel inventory
Stainless steel inventory fell in July. As of the end of the month, the total inventory of stainless steel was 1.1022 million tons, a decrease of 2.5% from the beginning of the month.
Market analysis
In summary, the tightening of quotas for RKAB nickel mines in Indonesia continues to ferment, forming a bottom line for mining costs; Partial steel mills are jointly reducing production and controlling inventory, which may bring marginal improvement as the stocking window approaches the mid to late peak season of "Golden September". The listing of stainless steel futures and options on the Shanghai Futures Exchange is expected to increase activity. However, the rebound in production of the 300 series coupled with the continuation of the off-season makes it difficult to reverse the pattern of strong supply and weak demand. Export barriers are difficult to eliminate in the short term, and slow inventory depletion seriously restricts the rebound space. It is expected that there will be a wide range of fluctuations in August, with a first suppression and then a rise. The key turning point lies in the results of quota implementation, steel plant production scheduling, and the pace of consumption recovery. It is difficult for the supply and demand pattern to have a trend upward before substantial improvement.
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