Industry Off-Season: Stainless Steel Faces Strong Resistance to Growth

Last week, stainless steel prices maintained stability. During the week, acero inoxidable futures prices surged and then retreated, driving market transactions. By the close of the night session on Friday, the leading stainless steel futures contract fell by 10 yuan/ton to 1,2555 yuan/ton.

Steel Products: Futures Prices Fluctuate After Rally, Stainless Steel’s Volatile Trend Continues

304 Stainless Steel

The market price of 304 acero inoxidable edged up this week. As of Thursday, the mainstream base price of private cold-rolled 4-foot 304 stainless steel in Wuxi stood at 12,350 yuan/ton, a rise of 50 yuan/ton from the previous Friday; the price of private hot-rolled products was quoted at 12,200 yuan/ton, an increase of 100 yuan/ton from the previous Friday. At the start of the week, stainless steel prices reversed the decline and rebounded, breaking through the 12,500-yuan mark, market transactions picked up, and inventory continued to be depleted. On Friday, stainless steel prices pulled back sharply, market transactions cooled down again, and traders cut prices to boost sales.

Overall, the Federal Reserve cut interest rates by 25 basis points in December, and the domestic Political Bureau meeting was held, boosting macro sentiment. In the short term, the stainless steel market may continue its volatile trend. The destocking of spot inventory and the recovery of transactions will provide phased support for prices. However, the upside potential may be somewhat constrained as downstream demand is only for rigid inventory replenishment, making it difficult for transactions to maintain volume growth. The market is expected to maintain a relatively strong volatile trend in the short run, and subsequent focus should be placed on the implementation of macro-friendly policies on the demand side and marginal changes in steel mills’ shipment strategies.

201 Stainless Steel

Futures prices showed mixed performance this week, while spot prices of 201 acero inoxidable kept rising. At the beginning of the week, the price of J2 cold-rolled products was quoted around 7,000 yuan as the base price for shipment. Low-priced resources in the market were quickly depleted, and transaction volume was robust. After futures prices strengthened again, spot prices followed the upward trend to 7,050 yuan as the base price for shipment. However, downstream buyers showed weak willingness to purchase high-priced resources, slowing down the inventory destocking pace. As the weekend approached, futures prices turned from positive to negative, market sentiment shifted to wait-and-see mode, and some merchants offered discounts for actual transactions.

During the week, the Federal Reserve announced a 25-basis-point interest rate cut in December. The improved macro sentiment drove the continuous rise of the non-ferrous metal sector. Both copper and manganese prices hit multi-year highs, increasing the production cost of 201 stainless steel and strengthening the floor support. In December, steel mills maintained reduced production, but the demand side still lacked sustained improvement, and the pattern of weak supply and demand is expected to persist. Attention should be paid to the subsequent movements of steel mills and downstream demand. It is predicted that the gross base price of 201 J2/J5 cold-rolled stainless steel will fluctuate within the range of 6,900-7,200 yuan/ton in the short term.

430 Stainless Steel

The price of 430 stainless steel remained stable this week. As of Friday, the quotation of state-owned cold-rolled 430 stainless steel in Wuxi spot market ranged from 7,600 to 7,650 yuan/ton, and the price of state-owned hot-rolled products was quoted at 6,800 yuan/ton, both unchanged from last week’s prices. In the first half of the week, boosted by the rise in futures prices, the transaction atmosphere in the spot market improved, and low-priced resources were quickly absorbed. With the correction of futures prices in the second half of the week, market sentiment turned cautious. Downstream procurement was mainly driven by rigid demand, resulting in sluggish overall transactions, and inventory in the spot market continued to accumulate.

On the whole, the retail price of high-chromium rebounded and stabilized this week, and the high-chromium steel bidding price in December was better than market expectations, providing certain cost support for 400-series stainless steel. In December, steel mills continued to reduce supply, which may gradually ease the market supply pressure in the later period. However, constrained by the traditional consumption off-season, downstream demand is unlikely to see significant improvement. In addition, current traders are cutting prices to ship goods for capital withdrawal, so prices will still face certain downward pressure in the future. Given that steel mills have a strong willingness to support prices, it is expected that the price of 430 acero inoxidable will maintain weak stability in the short term. Subsequent focus should be on steel mills’ production scheduling dynamics and market transaction conditions.

Raw Materials: Nickel and Chromium Prices Stabilize After Decline, Cost Support Remains Weak

Ferronickel

The ex-factory price of high-grade ferronickel edged up this week. As of Friday, it was quoted at 890-900 yuan per nickel unit, an increase of 5 yuan per nickel unit from the previous Friday.

The ferronickel market transactions remained sluggish. A steel mill in South China offered an inquiry price of 860 yuan per nickel unit this week, but upstream ferronickel plants and traders had a strong intention to support prices, resulting in no transactions concluded with major steel mills during the week. Currently, nickel ore prices remain firm, coupled with production cuts and capacity switching by Indonesian ferronickel plants due to losses. In December, many steel mills have plans to reduce production, leading to decreased demand for raw materials and intensified game between buyers and sellers. It is expected that ferronickel prices will remain stable in the short term.

Ferrochromium

The mainstream ex-factory quotation of high-carbon ferrochromium remained stable this week, hovering around 7,900-8,100 yuan per 50-base ton, unchanged from last weekend. Spot prices of chromium ore stabilized after the decline. The price of 40-42% South African ore powder, a major variety in the spot market, stayed at around 51 yuan per ton unit, the same as last weekend; the price of 40-42% Turkish lump ore maintained weak stability at 57 yuan per ton unit, unchanged from last weekend. The comprehensive production cost of high-chromium remained basically unchanged.

Recently, domestic output of high-chromium has increased significantly, while import volume stayed at a low level, leaving supply pressure lingering. Combined with the production reduction of downstream stainless steel, the demand for high-chromium has declined. It is expected that high-chromium prices will remain stable for the most part next week.