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Weekly Average Price|| 201 price trend rose against the trend. Stainless Steel Market Summary in China(9th, Nov – 13th, Nov)


304/2B: The average price of 2.0*1219*C (slit edge) of ZPSS in the Wuxi market is US$2,200/MT(plus taxes) which is US$78/Mt lower than that of last week, and the decreasing percentage is 3.67%. Besides, the average price of 2.0*1219*C(slit edge) in the Foshan market is US$2,245/MT(plus taxes) which decreases by US$75/MT, and the decreasing percentage is 3.17%.

304/2B: The average price of 2.0*1240*C (mill edge) of Hongwang in the Wuxi market is US$2,070/MT(plus taxes) which is US$62/MT lower than last week and the declining percentage is 2.82%. Besides, the average price of 2.0*1240*C (mill edge) of Hongwang in the Foshan market is US$2,070/MT(plus taxes) which decreases by US$43/MT compared with last week and the decreasing percentage is 1.98%.

304/No.1: The average price of 4.0*1520*C (mill edge) of ESS in the Wuxi market is US$2,005/MT(plus taxes) which decreased by US$54/MT compared with last week and the declining percentage is 2.55%. Furthermore, the average price of 4.0*1520*C(mill edge) in the Foshan market is US$2,030/MT(plus taxes) which is US$32/MT lower than last week and the decreasing percentage is 1.51%.

316L/2B: This week, the average price of 2.0*1219*C of TISCO in the Wuxi market is US$2,940/MT(plus taxes) which dropped by US$18/MT compared with last week and the decreasing percentage is 0.59%. Moreover, the average price of 2.0*1219*C(slit edge) of TISCO in the Foshan market is US$2,990/MT(plus taxes) which decreases by US$22/MT compared with that of last week, and the decreasing percentage is 0.67%.

316L/No.1:  This week, the average price of 4.0*1500*C(mill edge) of ESS in the Wuxi market is US$2,730/MT(plus taxes) which is US$48/MT less than last week and the decreasing percentage is 1.63%. What's more, the average price of 4.0*1500*C(mill edge) in the Foshan market is US$2,785/MT(plus taxes) which is US$34/MT less than last week and the declining percentage is 1.14%.

201/2B: This week, the average price of 1.0*1219*C(mill edge) of Hongwang in the Wuxi market is US$1,155/MT(plus taxes) which is US$9/MT more than last week and the rising percentage is 0.79%. Besides, the tax-inclusive average price of the Foshan market is US$1,165/MT(mill edge) which increases by US$18/MT compared to last week and the increasing percentage is 1.58%.

J5/2B: The average price of 1.0*1219*C(mill edge) of the Wuxi market is US$1,105/MT(plus taxes) which is US$18/MT higher than last week and the rising percentage is 1.67%. Besides, the tax-inclusive average price of the Foshan market is US$1,115/MT(mill edge) which increases by US$18/MT compared with last week and the increasing percentage is 1.65%.

430/2B: The average price of 2.0*1219*C(slit edge) of TISCO in the Wuxi market is US$1,300/MT(plus tax), which is US$14/MT higher than last week and the rising percentage is 1.04%. The average price of 2.0*1219*C(slit edge) in the Foshan market is US$1,290/MT(plus taxes) which increased by US$18/MT and the rising percentage is 1.41%.


What did Tsingshan keep reducing the price for? For increasing the production?   



Entirely, the global stock market has been on a rise. On 17th, November, until the close at noon, the WTI increased by 2%; LME copper rose by 2.5% and LME nickel also presented a strong tendency——increasing by US$200 within a day and climbing to US$16,000.


Lately, after a whole year of decreasing in price, the 200 series finally makes the price rise. 400 series is also in the upward trend because of lacking stock. But 304, again, decreases. Tsingshan has taken the leading role of the dropping price, cut down by US$31/MT compared with the market price. Except for his competent who followed this price reduction, other mills choose to wait and see. 
 

1.    Price reduction is a preparation for the increasing production volume. 

Rumor has it that Tsingshan reduces the production of 200 series in November, while the production of 300 series continues to increase by 60-80 tons every month. Moreover,
in December, it will keep rising and add 200 thousand tons more.   
 
There is another news stating that Tsingshan will not only increase the supply volume for the agents in the next year but also expand his agent team. There will soon be more agents of Tsingshan in the market.

Therefore, it comes with the reason that why we can see the news that “Tsingshan cuts down US$77, guiding the market price to drop”, and “Tsingshan’s agents reduce US$31/MT for selling out the product quickly, which is defaulted by the Group”.

About the price reduction, an opinion states that Tsingshan wants to stimulate the downstream purchase or to suppress other mills to reduce their production so that Tsingshan can get prepared for the increasing 300 series production.


2.    Tsingshan will take the custodial role of a steel mill in Guangdong. Will this be the reason for the increasing 300 series production? 

After November, there is a prediction going around in the market that
Tsingshan will take over the production line of a large-scale stainless steel mill in Guangdong which can make steel.

Let’s make a simple comparison between the ferronickel costs:



Regardless of the freight and other factors, if using the Indonesian ferronickel which is low in cost, every ton of stainless steel production can be saved by US$738/MT in cost. During the 400 series production, there is no ferronickel needed, and thus the change of Indonesian ferronickel does not affect the cost of the 400 series at all.  

From the perspective of profit margin, if the steel mill that is said to be taken over put all the productivity into 300 series, the 300 series production of Tsingshan will improve about 150 thousand tons every month, which coincidentally matches the rumor that in December,
300 series production of Tsingshan may increase by 200 thousand tons.     

3.    Tsingshan might increase production in 2021.

Some experts explained it mathematically simply: if the takeover is successful, and the mill focuses on producing 300 series only, the mill will produce more than 1.8 million tons of 300 series annually.
Plus, the new project of 4-million-ton stainless steel that Tsingshan builds in Yangjiang will accomplish in September of next year. Not to mention Tsingshan’s original annual production of 300 series flat products in China can reach more than 4 million tons, when the volume output increases by over 800 thousand tons every month, how can the market consume such an enormous excess of products?

There may be only one way. Make the price drop, and drop until everyone is willing to purchase. Yet we also know that Tsingshan is not the only mill considering increasing production, other giants like Tisco and Delong will also do in the next year. As for Baosteel who recently has been getting ready for the new agents, this action is a clue for the increasing production in 2021. The 300 series market will be extremely intense in 2021!  

What’s more, there is no anti-dumping tariff on importing cold rolling plate products and the stainless steel half-done products with square section (stainless steel billet) in China. 

Tsingshan now is catching the import cost advantage, and the production of South China stainless steel base is releasing. Its Chinese OEM, Yongjing, and Hongwang are fully arranged, so it is time for Tsingshan to find the third OEM to realize the production. 

Another explanation proposes that after 2021, Indonesian ferronickel production will be enlarged, why not finding a Chinese steelmaker for himself, which can make the whole process from producing to selling on his own to expand the profit margin.



Market|| Rise against the downward trend. 201 increases by US$8/MT-US$15/MT.



On Tuesday(17th November), the market was in swift change. One after another, the 304 futures(for December) price of every giant mill dropped greatly, and soon 316L followed suit. The market was subdued and made a price adjustment for the second time. Only the price of 201 rose against the downward trend.   

Earlier in the day, cold-rolling 201 (mill-edge and 4-feet) was around US$1,135/MT; the base price of J2 and J5 were quoted at about US$1,085/MT. Since the transaction turned good, the price continues to increasing, which went up by US$8/MT and was quoted at US$1,090/MT. The hot rolling and 5-feet products were quoted at around US$1,180/MT.   

The reason why 201 can stand up among the price reductions of other series is that Tsingshan boosts the 201 prices on purpose.
On one hand, because the steel mills' stock market price increases this time, it is less possible for 201 to fall. On the other hand, the inventory of cold rolling 201 is left less. Typically, J2 with thicknesses of 2.0mm and 3.0mm has been lacking in stock and now it becomes more serious.



----------------------------------------------------------------------------------Stainless Steel Market Summary in China----------------------------------------------------------------------------------

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