Price trends

According to price monitoring by SunSirs, stainless steel prices have recently seen a slight decline. As of August 14, the daily average spot price for 304/2B stainless steel sheets (specifications: 1.0 x 1219 x 2438 mm; 0.91 mm tolerance) stood at 13,291.67 RMB/ton, down 0.68% from the beginning of the week but up 8.24% year-on-year.

According to the price spread analysis tool from SunSirs, nickel and stainless steel prices have followed similar trends, recently experiencing a slight decline.

Analysis and Commentary

Total stainless steel inventories stood at 1.1 million tonnes last week, with stocks of both cold-rolled and hot-rolled products increasing.

Raw Materials: Last week, the price of ferromolybdenum rose by 1,500 RMB/ton, while prices for ferronickel and ferrochrome remained flat; overall stainless steel production costs stayed relatively high. Based on calculations for 304 cold-rolled steel, the profit margin—derived from current raw material costs—stood at 0.24%, indicating a significant narrowing of steel mill profits. Overall, regarding raw materials, ferronickel prices retreated after halting their rise, ferrochrome remained weak but stable, and stainless steel scrap faced downward pressure; while cost support has loosened compared to the previous period, it has not yet collapsed.

Supply: Steel mill production schedules increased week-on-week; market-available supplies remained ample, with no easing of supply-side pressure. Operations at port terminals and processing plants were constrained early in the week due to adverse weather—including a typhoon—causing shipment delays for some steel mills. Later in the week, Tsingshan lowered its quotes by 300 RMB/ton over two consecutive days; private agents and traders followed suit, intensifying selling pressure in the market. Nationwide social inventories of stainless steel in major markets rose slightly to 1.1059 million tonnes, remaining at historically high levels with a trend of continued accumulation.

Demand: End-user demand remained sluggish, consistent with the typical off-season pattern, and downstream buyers adopted a cautious "wait-and-see" stance. Early in the week, concerns over weather-related logistics delays prompted some end-users to make advance purchases, leading to a slight improvement in trading activity; however, as prices continued to fall during the latter half of the week, bearish sentiment intensified, causing downstream buyers to hold off on orders and resulting in a marked decline in transaction volumes. Emerging industries are currently unable to drive an increase in stainless steel demand; overall market activity is dominated by essential needs, with traders prioritizing volume sales at lower prices and speculative participation remaining weak.

Overall, regarding costs, prices for ferronickel and ferrochrome remained flat month-on-month, while ferromolybdenum rose by 1,500 RMB/ton; consequently, the aggregate cost of stainless steel remained high. Firm raw material prices provided a degree of cost support. On the industry front, market expectations were repeatedly unsettled by news regarding the approval of RKAB (Work Plan and Budget) for nickel ore in Indonesia; reports on August 14 suggesting a potential significant increase in quotas briefly triggered a sharp, simultaneous drop in SHFE nickel and stainless steel (SS) futures. Furthermore, successive price adjustments by Tsingshan dampened market sentiment; the convergence of macroeconomic sentiment and industrial fundamentals intensified the tug-of-war between long and short positions.

Market Outlook

Stainless steel market trends are expected to remain weak and volatile next week. While improved Non-Farm Payroll and CPI data have dampened expectations for Federal Reserve rate hikes—and firm raw material prices provide cost support—increased production schedules at steel mills have led to ample supply; meanwhile, weak off-season demand and the continued accumulation of high inventories are capping the potential for price gains. Key factors to watch include the pace of market arrivals and inventory destocking; in the short term, the market lacks a clear upward driver, and prices are likely to fluctuate within a weak range.

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