Latest Update in the SMM Finished Steel Market

【SMM Analysis】Finished steel holds firm while raw materials diverge lower; stainless steel cost center shifts down and profits recover This week, stainless steel mills continued to push for lower raw material purchase prices, leading to marginal recovery in profitability and further easing of industry-wide losses. Based on 304 cold-rolled product calculations, mill profitability showed clear divergence this week: profit margin based on current raw material costs recovered to 1.53%, turning positive, while profit margin based on inventory raw material costs remained at -1.87%, dragged down by previously purchased high-priced raw material inventory. Overall profit pressure has eased but has not yet been fully cleared. Nickel-based raw materials extended their weak trend this week, though the pace of decline slowed significantly. With the National Day holiday approaching, downstream market trading was generally sluggish. Concerns over concentrated cargo arrivals after the holiday, combined with rising expectations for stainless steel production cuts and weakening demand expectations, put inventory accumulation pressure on NPI, keeping the overall market in the doldrums. However, supply disruptions in Indonesia due to water shortages and phased mill purchasing and restocking provided periodic support, effectively limiting NPI downside. As of this Friday, the delivered duty-paid price of Indonesian high-grade NPI with 10-12% nickel content in China edged down only 3 yuan per nickel unit to 1,045 yuan per nickel unit. Stainless steel scrap prices remained stable and consolidated this week. SHFE nickel futures weakened during the week, but SS futures held relatively firm, effectively underpinning stainless steel spot prices and providing support for the scrap market. On the fundamentals side, the weak pace of peak-season recovery and expectations for lower October mill production schedules capped scrap upside, but overall tight scrap supply, coupled with stainless steel scrap's stable cost advantage over NPI, effectively offset bearish demand factors...

[SMM Analysis] Weakness in Finished Steel Drags Down Raw Materials; Steel Mills Remain in Losses as Stainless Steel Cost Center Shifts Lower Overall This week, stainless steel finished product and raw material prices pulled back in tandem, industry smelting profits remained in a loss-making pattern, and the overall cost side center shifted further downward. Based on 304 cold-rolled category calculations, profit pressure at steel mills continued to be prominent this week, with a profit margin of -0.25% based on current raw material accounting and -2.56% based on inventory raw material accounting. Losses on inventory raw materials were deeper, and production and operating pressure at steel mills continued to intensify. Overall, finished steel prices weakened along with futures, and raw materials followed the decline, but against the backdrop of a weak market, industry-side demand and procurement continued to contract, and the industry's loss-making pattern was not repaired. Nickel-based raw material prices came under further downward pressure this week, with pessimistic trading sentiment dominating market movements. The expected recovery during the September-October peak season for stainless steel has completely failed to materialize, end-user rigid demand has remained sluggish, and steel mills have been mired in cost-inversion losses for a long time. Their acceptance of high-priced nickel raw materials has remained persistently low, and procurement sentiment has turned cautious. Meanwhile, high-grade NPI port inventory has stayed high, and the loose supply pattern has not changed, further amplifying weak market expectations and driving continued pullbacks in nickel pig iron quotes. As of this Friday, the delivered duty-paid price of China's 10-12% grade Indonesian high-grade NPI fell by 25 yuan per nickel unit to 1,085 yuan per nickel unit, with nickel-based cost support continuing to weaken. This week, stainless steel scrap prices also remained in the doldrums, and its cost substitution advantage was insufficient to offset bearish fundamental pressure. During the week, SS futures continued to hit bottom, finished steel and nickel pig iron prices moved down in tandem, and the bearish resonance between futures and spot markets persisted, with overall market sentiment...

This week, ferrous metals trended mostly higher, with performance varying slightly among varieties. Coking coal and coke were the strongest performers, while iron ore and finished steel posted relatively limited gains. During the week, safety supervision remained stringent, the pace of production resumptions at coal mines fell short of expectations, and structural shortages of coking coal grades further deepened, leading coking coal futures to continue rising. Coking plants suffered heavy losses...

[SMM Analysis] Finished Product Prices Fall in Tandem, Stainless Steel Mill Profits Slightly Compressed This week, stainless steel prices and production costs declined in tandem, with steel mill profit margins narrowing slightly. Using 304 cold-rolling as the assessment basis, the profit margin calculated with current raw material costs stood at 2.28%, while that based on inventory raw materials was 2.1%. On the nickel-based raw material cost side, high-grade NPI prices showed a downward pullback this week. Affected by weakening SHFE nickel and SS futures, coupled with disturbances from Indonesian nickel ore news, although NPI producers and traders maintained a strong willingness to hold prices firm, expectations of off-season maintenance and production cuts at stainless steel mills and the pullback in stainless steel prices led to low acceptance of high-priced raw materials, driving high-grade NPI prices to decline and pull back. As of this Friday, high-grade NPI with a mainstream grade of 10%-12% fell by 8.5 yuan per nickel unit, closing at 1,141 yuan per nickel unit. In the stainless steel scrap market, prices fell in tandem this week. SS futures pulled back and stainless steel finished product prices declined, dragging down stainless steel scrap. Currently in the traditional consumption off-season, end-use demand is weak, and expectations of lower steel scrap demand due to mill production cuts and maintenance, along with bearish macro sentiment, led to more cautious purchasing attitudes. Although stainless steel scrap holds an economic advantage over NPI and finds some bottom support, it is struggling to withstand the combined weight of multiple bearish factors, and the short-term market remains under pressure. As of this Friday, mainstream 304 off-cuts in Shanghai fell by 50 yuan/mt, with the latest quotation at approximately 10,500 yuan/mt. On the chrome-based raw material cost side, high-carbon ferrochrome prices continued to edge down this week. This week, TISCO and Tsingshan successively...

[SMM Stainless Steel Scrap Market Weekly Review] Finished Products Decline Drives Down Stainless Steel Scrap Prices; Cost Advantages Fail to Offset Off-Season Pessimism This week, the price of 304 stainless steel scrap off-cuts in east China pulled back, with a quotation range of 10,450-10,550 yuan/mt; the same specification stainless steel scrap prices in Foshan also pulled back, with a price range of 10,350-10,650 yuan/mt. Analyzing production costs from the raw material side, the cost of producing stainless steel entirely with stainless steel scrap is currently about 14,640.79 yuan/mt, while the cost using high-grade NPI reaches 15,072.29 yuan/mt, with the two still maintaining a favorable cost spread. This week, stainless steel scrap prices pulled back. During the week, SS stainless steel futures and SHFE nickel futures both pulled back, with bearish sentiment in the futures continuing to ferment. The bearish trend spread to the spot market, dragging down spot prices of stainless steel finished products. At the same time, the alternative raw material high-grade NPI prices also weakened, forming a linkage of declines across futures, finished products, and alternative raw materials, which directly dragged down stainless steel scrap prices this week. Overall, cost support is difficult to offset multiple bearish pressures. The market is currently in the traditional stainless steel consumption off-season, with end-use demand itself weak. Coupled with macro uncertainties such as warming expectations for US Fed interest rate hikes, overall market sentiment is relatively pessimistic, and downward pressure on raw material prices continues to increase. Meanwhile, recent news of stainless steel mill production cuts and maintenance has emerged frequently, further lowering market expectations for stainless steel scrap demand. Although stainless steel scrap still maintains good economic advantages compared with high-grade NPI, providing some bottom support...

This week, ferrous metals diverged, with coking coal and coke extending their strength, iron ore making some concessions, and finished steel moving sideways. Early in the week, rumors about coal mine safety inspections continued to swirl, and expectations of supply tightness intensified, driving coking coal to its daily limit up. Against weak supply-demand fundamentals, iron ore took a path of conceding to coking coal and coke, while finished steel edged higher in a narrow range; later in the week, data on the five major steel products were released, with HRC inventory destocking continuing, the off-season effect on construction steel demand emerging, inventory destocking narrowing, and overall inventory pressure for finished steel also beginning to slowly accumulate......