China’s stainless prices retreat on sliding nickel price

Posted on 11 September 2020

Prices in the China’s futures and physical markets for stainless steel both weakened recently with the fall in nickel prices globally and slowing demand from domestic end-users, Mysteel Global has learned.

As of September 9, the most-traded stainless futures contract on the Shanghai Futures Exchange for November delivery closed the daytime session at Yuan 14,190/tonne ($2,074/t), seeing a substantial fall of Yuan 620/t from the settlement price on the prior day. Also on Wednesday, the spot price of 304/2B 2mm stainless CRC in Wuxi slid to Yuan 15,300/t in-warehouse and including the 13% VAT, off by Yuan 100/t from the nine-month high set on September 3, according to Mysteel’s data.

The retreat in stainless futures and spot prices was mainly driven by the drop in global nickel prices, Mysteel Global notes. The three-month nickel buyer price on the London Metal Exchange slipped for a third day as of September 9, falling by a large $279/t on day to $14,853/t.

Besides, stainless demand from Chinese end-users also slowed down, as high-priced products were not popular in the domestic market. “After noting the weakness in nickel prices, many end-users prefer to digest their on-hand stocks first and monitor any market changes in the coming term,” a market source in Shanghai said.

Although September is traditionally a peak month for stainless consumption in China, so far demand from end-users is not as strong as the market had expected. It seems that demand was overdrawn in advance when prices were moving up rapidly in the second half of August. The stocks of stainless held by some end-users can fulfill their needs till November, Mysteel Global notes.

Evidence of the market’s caution shows up in Mysteel’s daily survey of trading in Foshan, South China’s Guangdong province, where over September 1-9, spot trading volume of stainless CRC including 200- and 300-series slumped by more than 30% compared with the average in late August.

However, some stainless producers are still relatively optimistic about the stainless market going forward, given the support of higher raw materials costs including nickel pig iron (NPI) and nickel concentrates, as the tight supply of nickel concs may continue in the near term with the upcoming rainy season in the Philippines and the on-going ban on the export of these from Indonesia, as Mysteel Global reported.

As of September 9, the price of 8-15% grade NPI in East China’s Jiangsu province was still at the 10-month high of Yuan 1,180/mtu including delivery and 13% VAT, up another Yuan 10/mtu on week, according to Mysteel’s data. As of the same day, the price of 1.5% Ni content concentrates from the Philippines had jumped by another Yuan 55/t on week to a new record-high of Yuan 541/t including the VAT in East China.

 

Written by Nancy Zheng, zhengmm@mysteel.com

Edited by Russ McCulloch, russ.mcculloch@mysteel.com

Source : Mysteel Global