TREND|| Raw material cost is increasing.
Last week, both stainless steel futures and spot markets weakened. Contract 2108 of stainless steel futures decreased by US$78/MT. As for the spot products, in Wuxi market, cold-rolling 304 dropped by US$16/MT. The 4-feet and mill-edge price of Hongwang goes to US$2,710/MT and US$2,790/MT in 2.0 slit.
How will the trend move in this and next week?
304: Overall stock trend goes toward positive, while the macroeconomics is unfavorable.
Macroeconomics: Last week, in the FED meeting about interest rates, the tightening policy is released in advance. Globally, non-ferrous commodities fell sharply across the board. LME Copper has fallen by more than 14% from the previous highest point. LME Nickel has fallen by about 6% from the current high. However, the impact on the stainless steel futures market is smaller. The macroeconomic policy's influence on stainless steel futures has gradually weakened, which is conducive to the recovery of confidence in the spot market.
Demand: It gradually turns higher.
In recent months, stainless steel has continued to be in a state of "high production, low inventory". According to statistics, China's stainless steel flat-rolled crude steel production volume increased by 48,000 tons in May to 1,285,800 tons. It is expected that in June it will increase by 52,000 tons, reach 1.338 million tons. However, the spot market has been digesting the inventory. Until early June, the total inventory of the 300 series in Wuxi and Foshan market reached 442,500 tons, decreasing by 104,300 tons compared to the highest point in recent one year. Last week, the inventory of the 300 series in Wuxi market rose by 15,700 tons, but since this increase is mainly due to the steel mills' pre-resources, the possibility of selloff is small.
Raw material: Cost is getting higher.
From the perspective of the 300 series, the domestic supply of ferronickel is still in short. According to market news, during May and June, large Chinese steel mills have been expanding domestic purchases of ferronickel. Therefore, it is expected that there will be no significant increase in Indonesian ferronickel import to China in May and June. The demand for raw materials maintains strong due to the ongoing rise of the current output of the 300 series. The industry predicts that high nickel iron is expected to exceed US$188 per nickel in the future.
Overall, we predict that the market is working towards a good. With the vaccine covers more people, the pandemic in America, India, and other countries can be controlled and so the economy is recovering. Last week, FOMC released news about increasing interest rates earlier.
In the future, the capital will greatly weaken the sentiment of commodity speculation. Once the global non-ferrous metals and other commodities continue to decrease, it will inevitably affect the stainless steel market.
201: Weak demand coexists with higher costs.
Due to the recent rise in the prices of ferrochrome and electrolytic manganese, the production cost of the 200 series continues to go up. At present, the cost of cold rolling J1 has moved up to around US$1,505/MT, which is slightly losing profit in the current spot market price.
Inventory: It is being consuming.
Last week, the inventory of the 200 series in Wuxi market increased to 58,500 tons which is 900 tons more than a week ago. The 200 series cold-rolled resources are increasing, mainly from Chengde, LISCO, Baosteel Desheng, and other resources. The hot-rolled 201 spot inventory is still in a downward trend. Because the steel mills switched their production compositions, the lease resources have not yet come to the market. Traders mostly sell the spot inventory.
According to statistics, the output volume of 200 series flat steel crude steel in June was 872,000 tons, a decrease of 80,000 tons from the previous month. The overall supply pressure may weaken. However, the current transaction is still in a tepid state, and thereby the price is expected to remain stable.
400 series: Inventory remains large, but the raw material cost limits the price to fall.
Ferrochrome: In June, the main producing areas of high chromium were in a shortage.
Because of lacking of electric power, high chromium production in Inner Mongolia and Guangxi is expected to decline. However, after June, Sichuan enters the rainy season and hydropower supply will increase, so high chromium production will be greater. The production of high chromium in Shanxi province has also increased significantly recently. In general, the output of high chromium in June remains above 520,000 tons.
Last week, high-carbon ferrochrome has risen by US$31/MT, and the price is US$1,240/50 base tons. Xinsteel Inner Mongolia and Mintal Group, two major high chromium manufacturers, have successively issued announcements about raising the ex-factory retail price of high-carbon ferrochromium to US$1,256/50 base tons, stimulating market price to increase. In the short term, the high chromium market will still support the high price of stainless steel.
In May, the output of 400 series stainless steel was 548,000 tons, month-on-month decreased by 62,700 tons. In June, Baosteel Desheng’s new production plan was postponed. What’s more, it is said that the overhaul of JISCO has little effect on output. The supply of the 400 series in June is expected to remain as the quantity in May. From the perspective of market inventory, last week, the Wuxi market's 400 series inventory increased by 4,500 tons and rise to 87,400 tons. The inventory remains high, which affects the spot market price. Although steel mills continue to boost prices, the downstream demand is difficult to keep up.
304: It is expected that the 304 spot price may remain fluctuated next week. The four-foot mill-edge cold-rolled 304 of Hongwang will remain at around US$2,710/MT. In the long run, the price of stainless steel is likely to rise, but it is necessary to watch out for the risks of macroeconomics and the later release of new capacity.
201: Although the current demand is tepid, with the continued increase in costs and the expected decline in supply, prices are unlikely to fall in the short term, and the overall trend may remain stable.
430: At present, 400 series stainless steel has a heavy inventory, making the price difficult to increase. But as the current high-carbon ferrochromium price keeps increasing, the market price will increase. It is expected that the transaction price of 430/2B will remain stable next week, at around US$1,620/MT ~ US$1,635/MT.
OUTBREAK|| The logistic market is in chaos.
When the ports in Southeast China are still stuck in the pandemic, more accidents stoke into the Chinese logistic industry.
1. Shanghai port was suddenly in fire, forcing the dock to pause.
At about 4 pm on June 17, a fire broke out in the outside five districts of Shanghai port, which is the world's largest container port. The fire caused all ports of Shanghai Port to suspend.
In response to this incident, SIPG issued an announcement on the evening of June 18.
According to the announcement, at 15:50 on June 17th, a freezer spurred out spontaneous combustion. The fire was promptly extinguished by the fire team. The fire was completely extinguished at 22:30 on June 17.
During this period, terminal services were suspended for 2 hours. The terminal got back to normal operations after 23:00. There were no casualties or secondary disasters during the whole process.
2.Pandemic in Southeast China is getting worse. A logistic industrial park locks down.
The world's largest single container terminal-Yantian Port has been into semi-paralysis since May. Although Yantian Port has gradually recovered recently, the industry generally believes that it will take a long time for this international shipping and logistics hub to return to its pre-epidemic level.
On June 17th, the epidemic in Shenzhen came to an emergency again. An international logistics park near the airport was closed.
Shenzhen Airport Prevention and Control Office reported on the 17th that an airport terminal catering service staff was diagnosed. The airport has taken a number of emergency measures to track and control the spread of the epidemic.
3. A container ship of 2M Alliance caught fire.
Also on June 16, a container ship MSC TERESA reported a cabin fire in the north of Ushant, English Channel!
Container ship MSC TERESA, IMO 9469560, dwt 166101, capacity 14000 tEU, built 2011, flag Panama, manager MSC.
The shipping schedule data shows that the ship serves the Asia-Europe AE6-TP2 route. The domestic ports call at Ningbo, Shenzhen Yantian and other ports, involving a number of shipping companies share cabins, including ALIANÇA, HAMBURG SÜD, HAPAG-LLOYD, MAERSK, MCC, SEAGO, SEALAND.
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