Posted on 14 Jan 2025
China's stainless steel market will likely enjoy robust support this year, in the shape of resilient end-user demand and firm input cost support, according to Mysteel's annual stainless steel report released on January 10.
Stainless steel demand demonstrated strong resilience throughout 2024 that was particularly evident in China's export performance, with data from the General Administration of Customs (GACC) showing that the country's stainless steel exports were on track to hit a record high last year. During the first eleven months in 2024, exports reached 4.58 million tonnes, surpassing the full-year record of 2022. By year-end, exports were expected to have totalled 5 million tonnes, according to Mysteel's report.
Besides the vigorous export activity, last year saw a notable increase in domestic stainless steel consumption, with Mysteel's data indicating that apparent stainless consumption in 2024 rose to 32.47 million tonnes, up 2.82% year-on-year.
This resilience is also reflected in the stock levels at Chinese stainless steel mills and commercial warehouses. Mysteel's survey of 15 producers showed that as of last December 31, total stainless steel inventories at mills stood at 896,200 tonnes, marking a multi-year low. Similarly, stocks at the 89 commercial warehouses tracked by Mysteel reached approximately 895,007 tonnes as of January 3, 2025, also near a year-low level.
"Stainless flats inventories have dropped significantly despite higher crude stainless steel output, underscoring strong downstream demand throughout 2024," a Mysteel analyst noted.
Looking ahead, the positive momentum of demand is expected to persist in 2025. Mysteel predicts that China's stainless steel exports will continue to benefit from an anticipated 3-4% increase in global stainless steel consumption, creating more opportunities for domestic producers in international markets.
On the cost side, support will remain strong due to firm nickel prices, particularly for nickel pig iron (NPI), a key raw material for stainless steel production.
"Indonesia, the world's largest holder of nickel reserves, has been tightening its nickel ore supply in recent years to support global nickel prices," a Wuxi-based nickel analyst remarked. "This trend is expected to continue into 2025, with Indonesia's nickel ore mining quota for the year set at 200 million tonnes – short of global consumption needs," he told Mysteel Global. An Indonesian mining ministry official earlier reported that the country had produced 215 million tonnes of nickel ore in 2024.
As NPI accounts for a significant share of stainless steel production costs, rising NPI prices have a direct impact. For instance, the cost of producing 304-grade stainless cold-rolled coil increases by Yuan 60-70 ($8.2-9.6) per tonne when NPI prices rise by Yuan 10/mtu, the analyst explained.
Despite the optimistic outlook, the report also highlighted potential risks. Mysteel's survey of 43 domestic stainless steelmakers projects that China's crude stainless steel production will grow by 4-5% in 2025, reaching around 39.8-40.2 million tonnes. While this growth would be slower compared to the 7.4% year-on-year climb seen in 2024, the increase may exert pressure on market fundamentals if demand does not expand proportionally.
Overall, China's stainless steel market is set to benefit from resilient demand and firm cost support in 2025, though challenges such as production growth and cost fluctuations will require close monitoring.
Source:Mysteel Global
