SunSirs: Stainless Steel Prices Rose First and Then Fell in August

Price trend

According to SunSirs price monitoring, stainless steel prices rose before falling in August. As of the end of August, the spot price of stainless steel was 12,085.71 RMB/ton, down 0.06% from the price of 12,092.86 RMB/ton at the beginning of the month and down 5.05% year-on-year.

Analysis review

A comparison of the annual stainless steel prices in the past five years by SunSirs shows that stainless steel prices rose and fell in half in September.

On the raw material side, nickel ore prices remained generally stable in August, even rising slightly, providing solid support for ferronickel costs. Although the Indonesian government raised nickel ore production quotas, various domestic policy restrictions (such as DMO domestic trade obligations, adjustments to biodiesel policies, and increased foreign exchange reserves), as well as the shutdown of approximately 28 RKEF production lines in the past two months, had resulted in actual production falling far short of the quota, and the anticipated easing of supply had not materialized. In late August, the tender price for high-nickel ferroelectric material at a major steel mill in South China reached 940 RMB per nickel point (bottom tax included), a 30 RMB/nickel point increase from the previous period's purchase price.

On the supply side, domestic crude stainless steel production was scheduled for August at approximately 3.22 million tons, a 0.59% increase from July. Of this, production of the key 300 series steel was scheduled for approximately 1.6983 million tons, remaining virtually flat month-over-month (a slight increase of 0.01%). Cumulative production from January to August reached approximately 20 million tons, an increase of approximately 3% over the same period last year. While this represented a year-over-year decrease, the month-over-month increase suggested that supply pressures had not been effectively alleviated.

On the demand side, being in the traditional off-season for consumption, major downstream industries such as home appliances, machinery, and construction were showing little interest in purchasing stainless steel. The home appliance industry, in particular, had been dragged down by the ongoing downturn in the real estate market, leading to slow sales growth in products such as kitchen appliances and bathroom fixtures, reducing demand for stainless steel sheet.

Regarding imports and exports, in July, domestic stainless steel imports were only 73,000 tons, a 33.3% month-on-month decrease and a 38.99% year-on-year decrease, hitting a 64-month low. Stainless steel exports returned to the 400,000-ton level, reaching 416,300 tons, a 6.76% month-on-month increase and a 1.40% year-on-year increase.

Stainless steel inventory: In August, stainless steel inventories initially fell and then rose, inversely proportional to stainless steel prices. By the end of the month, stainless steel inventories totaled 1.0917 million tons, down 1.3% from the beginning of the month.

Market outlook

In summary, the strength of stainless steel raw materials is expected to continue. Regarding nickel ore, the impact of the rainy season in the Philippines may gradually become apparent. Regarding ferronickel, with the arrival of the traditional peak stainless steel consumption season ("Golden September, Silver October"), demand from steel mills remains strong, and prices are likely to remain high. Furthermore, September is traditionally a peak consumption season, and the commencement of infrastructure and petrochemical projects is expected to boost demand. If downstream demand can be effectively released, inventory pressure will be alleviated, and stainless steel prices are expected to rebound. However, supply-side production remains at a high level, and demand is lagging behind, which will suppress the rebound momentum. High inventories and weak demand will continue to dampen the rebound. Prices of raw materials (such as ferronickel and ferrochrome) are stable but slightly strong, providing some cost support for stainless steel prices. In the short term, stainless steel market prices are expected to fluctuate and strengthen.

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