Posted on 03 Dec 2024
China's stainless steel market continued its downward trajectory for both austenitic and ferritic grades over November 22-29, driven by weak market sentiment and diminishing cost support, according to Mysteel Global.
As of November 29, Mysteel assessed the price of Hongwang's 304-grade stainless cold-rolled coil (CRC) in Wuxi, a major stainless steel trading hub in Jiangsu province, at Yuan 13,200/tonne ($1,820.9/t) in-warehouse, including VAT, marking a four-year low after a decrease of Yuan 200/t on-week.
The futures market mirrored this trend, with the most-traded January stainless steel contract on the Shanghai Futures Exchange closing the daytime trading session at Yuan 13,005/t on Friday, down by Yuan 210/t from one week before.
As stainless futures continued to lose ground, many futures traders opted to liquidate their warrants at lower prices before expiration. This, combined with lower-than-expected order volumes, further weighed down stainless prices in the spot market, sources noted.
The ongoing decline in stainless prices is also squeezing profits of domestic stainless steel producers, prompting them to tighten budgets for raw material procurement as an effort to preserve some margins. This further erodes the cost support for stainless steel prices, sources warned.
On a positive note, the price slump has spurred downstream demand to some extent, contributing to a decline in inventory levels. As of November 29, stainless steel stocks at 89 commercial warehouses across six Chinese cities, including Wuxi and Foshan in South China, totaled 936,756 tonnes, a 3.49% decrease from the previous week and the lowest inventory level since the Chinese New Year holiday in February.
This reduced stock level is likely to provide some short-term support for stainless steel prices, a Wuxi-based analyst observed. In fact, certain 200-series specifications have already seen price increases due to product shortages. For instance, Hongwang's 201/J1 CRC in Wuxi was assessed at Yuan 7,950/t in-warehouse, including VAT on Friday, up by Yuan 50/t from the previous week.
Source:Mysteel Global
