Posted on 20 Aug 2024
China's stainless steel market saw a further drop in prices over August 9-16, driven lower by persistently gloomy market sentiment. Concurrently, the pace of destocking at major domestic trading hubs slowed, indicating reduced buying interest among end-users, particularly for high-priced stainless products.
During the week, the price of 304/2B Hongwang 2*1240mm stainless cold-rolled coil (CRC) in Wuxi, a key trading hub in East China's Jiangsu province, fell by Yuan 100/tonne ($14/t) from the previous week, settling at Yuan 13,700/t by August 16, according to Mysteel's assessment.
This decline in stainless prices can largely be attributed to weakening cost support, market watchers suggested. Over the past week, prices of key raw materials for stainless steel production, including nickel pig iron (NPI) and ferrochrome (FeCr), also decreased.
For instance, the price of 8-10% grade NPI in Jiangsu had edged down by a slight Yuan 5/mtu on week to Yuan 1,010/mtu by August 16, including delivery and 13% VAT. Meanwhile, the price of high-carbon FeCr in North China's Inner Mongolia, a key domestic benchmark, had dropped by Yuan 100/tonne from the previous week to Yuan 8,600/t as of August 16.
Adding to the market pressure, Tsingshan Group, a leading stainless producer based in East China's Zhejiang province, announced a Yuan 100/t reduction in the listing prices of its 304-grade stainless coil products for August sales on August 14, just one day after announcing it would be maintaining them.
These price cuts led transactions at lower prices to increase last week, causing a slight reduction in warehouse stocks. However, with the low-priced supplies now being largely sold off, traders are likely to resist further price cuts, given their higher procurement costs, according to a Wuxi-based analyst.
As of August 15, total stainless steel stocks at the 89 warehouses tracked by Mysteel in six Chinese cities, including Wuxi and Foshan, had decreased slightly by 0.47% from the previous week to total 1.08 million tonnes. Specifically, stocks of stainless CRC had declined by 1.22% to 718,306 tonnes, while stocks of stainless hot bands saw a modest increase of 1.05% to 366,545 tonnes.
Looking ahead, the recent down trend in Chinese stainless steel prices could be moderated by a recovery in futures prices. On August 16, the most-traded stainless contract on the Shanghai Futures Exchange for October delivery rose by Yuan 70/t, closing at Yuan 13,655/t during the daytime trading session.
Source:Mysteel Global
