Posted on 23 Feb 2023
Though futures prices of stainless steel on the Shanghai Futures Exchange (SHFE) have rebounded over the past few days, the uptick hasn't been sufficient to boost Chinese spot prices of 304-grade products because actual buying among stainless users remains weak, according to market insiders.
Taking their cue from the positive sentiment seen recently in the other domestic futures markets for ferrous commodities including those of rebar and iron ore, stainless futures prices have ceased falling, with the most-traded April stainless contract on the SHFE closing the daytime trading session at Yuan 16,775/tonne ($2,432/t) on February 21, up Yuan 285/t from the settlement price on February 14.
In contrast, the spot price of 304/2B 2mm stainless cold-rolled coil (CRC) in Wuxi, a major stainless trading hub in East China's Jiangsu, dropped by Yuan 200/t on week to Yuan 17,450/t in-warehouse and including the 13% VAT on February 21, Mysteel's survey showed.
As of the same date, the spot price of 304/No.1 5mm stainless hot-rolled coil (HRC) in Wuxi was still unchanged on week at Yuan 16,900/t in-warehouse and including the 13% VAT.
"Buying interest for 304 stainless steel among end users will only be suppressed more if traders lift their offering prices now," a Shanghai-based market watcher explained.
Those buyers are waiting until prices drop to a level that is acceptable to them, given that currently, supply is rising but demand is slow, according to him.
Mysteel's tracking showed that the total stocks of 300-series stainless CRC and HRC at commercial warehouses in Wuxi and Foshan in South China's Guangdong grew to 723,286 tonnes during February 10-16, higher by 5,297 tonnes on week and a huge 44% on year.
As for stainless traders, the supply-demand imbalance has been exerting pressure on their cash flows, prompting them to concede a little on their offering prices to sell more stocks, the source added. Moreover, for the foreseeable future market fundamentals are likely to remain much as they are now so 304 prices will soften further, he suggested.
Source:Mysteel Global
