Posted on 28 Nov 2024
The market for stainless steel raw materials in China entered a severe slump over the past week, with the steel producers demanding even lower prices for key materials such as ferrochrome (FeCr), nickel pig iron (NPI), and stainless scrap. The demands reflect the mills' concerns about mounting losses and lackluster end-user demand, Mysteel Global observed.
On Monday, Tsingshan Group, China's leading stainless steelmaker based in Zhejiang, drastically reduced its December bidding price for high-carbon FeCr by Yuan 700/tonne ($96.4/t), slashing this to Yuan 7,395/t (50Cr). This price cut was significantly larger than the Yuan 300/t reduction announced on November 15 by Taiyuan Iron and Steel Corporation (TISCO), another major player in the stainless steel sector. Tsingshan's aggressive cut took the total drop in its prices over the past five months to Yuan 1,600/t and dragging market sentiment lower with it.
The oversupply of FeCr has been a major contributing factor to the market's woes, analysts note, with Mysteel estimating that by the end of November, the supply of FeCr will exceed demand by approximately 600,000 metal metric tonnes. This surplus has put downward pressure on prices, making FeCr more vulnerable to fluctuations compared to other raw materials used in stainless steel production.
In addition to the domestic oversupply, China's import volume of low-priced high-carbon FeCr surged by 13.43% in the first ten months of 2024, reaching 3.1 million tonnes, according to data from China's General Administration of Customs (GACC). As a result, on November 27 Mysteel assessed the price of high-carbon FeCr with 55% Chrome content in Inner Mongolia at Yuan 7,600/t – the lowest since September 2022.
The NPI market has also faced significant downward pressure. Last Friday a few days before its blitz on FeCr, Tsingshan had lowered its bidding price for high-grade NPI to Yuan 960/mtu, down Yuan 40/mtu from the previous bid on November 15, both for December delivery. The mill's hefty reduction is weighing heavily on spot NPI prices, with Mysteel reporting a Yuan 35/mtu decline on the price in Jiangsu at Yuan 965/mtu, EXW including VAT.
Tsingshan's price cuts appear to be aimed at mitigating the significant losses its upstream operations have been incurring. Mysteel's survey found that Tsingshan faced a 2.31% loss for each tonne of 304-grade stainless cold-rolled coil (CRC) produced using domestic NPI and FeCr in its blast furnaces, larger than the 1.14% loss the previous week.
On the other hand, Tsingshan has seen profitability improve on its electric-arc furnace (EAF) operations, with a profit margin of 1.39% on Tuesday, compared to 0.68% a week earlier, for each tonne of 304-grade stainless CRC made from stainless scrap, Mysteel's survey results show.
However, Tsingshan has shown no mercy to stainless scrap suppliers, slashing its buying price for 304-grade molten stainless scrap twice this week, first by Yuan 400/t on Monday and then by another Yuan 100/t on Wednesday, bringing the price to Yuan 9,100/t (96% of the solid scrap weight, nickel content at 8%). This marks a sharp drop from the previous bid of Yuan 9,600/t on November 11.
The decline in NPI and FeCr prices has also exerted downward pressure on the stainless scrap market. As a result, some stainless producers have reduced their scrap purchasing prices to offset the losses incurred from using NPI and FeCr as feedstock, analysts noted.
Source:Mysteel Global
