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Weekly Average Price|| Stainless Steel Market Summary in China (7th, Apr. – 10th, Apr.)



304/2B: The average price of 2.0*1219*C (slit edge) of ZPSS in the Wuxi market is US$1,775/MT(plus taxes) which is US$19/MT lower than last week and the declining percentage is 0.99%. Besides, the average price of 2.0*1219*C(slit edge) in the Foshan market is US$1,815/MT(plus taxes) which is also US$19/MT lower than last week and the declining percentage is 0.97%.

304/2B: This week, the average price of 2.0*1240*C(mill edge) of HONGWANG in the Wuxi market is US$1,670/MT(plus taxes) which remains as last week. What's more, the average price of 2.0*1240*C(mill edge) in the Foshan market is US$1,665/MT(plus taxes) which is US$3/MT higher than last week and the rising percentage is 0.14%.

304/No.1: The average price of 4.0*1520*C (mill edge) of ESS in the Wuxi market is US$1,615/MT(plus taxes) which is US$14/MT lower than last week and the declining percentage is 0.80%. Furthermore, the average price of 4.0*1520*C(mill edge) in the Foshan market is US$1,640/MT(plus taxes) which is US$15/MT lower than last week and the declining percentage is 0.85%.

316L/2B: This week, the average price of 2.0*1219*C of TISCO in the Wuxi market is US$2,605/MT(plus taxes) which is US$24/MT lower than last week and the declining percentage is 0.87%. Moreover, the average price of 2.0*1219*C(slit edge) of TISCO in the Foshan market is US$2,655/MT(plus taxes) which is US$24/MT lower than last week and the declining percentage is 0.85%.

316L/No.1: This week, the average price of 4.0*1500*C(mill edge) of ESS in the Wuxi market is US$2,390/MT(plus taxes) which is US$13/MT lower than last week and the declining percentage is 0.49%. What's more, the average price of 4.0*1500*C(mill edge) in the Foshan market is US$2,410/MT(plus taxes) which is US$22/MT lower than last week and the declining percentage is 0.86%

201/2B: This week, the average price of 1.0*1219*C(mill edge) of the Wuxi market is US$990/MT(plus taxes) which is US$19/MT lower than last week and the declining percentage is 1.89%. Besides, the tax-inclusive average price of the Foshan market is US$975/MT(mill edge) which decreases by US$8/MT compared to last week and the declining percentage is 0.81%.

J2, J5/2B: The average price of 1.0*1219*C(mill edge) of the Wuxi market is US$940/MT(plus taxes) which is US$16/MT lower than last week and the declining percentage is 1.70%. Besides, the tax-inclusive average price of the Foshan market is US$925/MT(mill edge) which decreases by US$11/MT compared to last week and the declining percentage is 1.16%.

430/2B: The average price of 2.0*1219*C(slit edge) of TISCO in the Wuxi market is US$1,030/MT(plus tax), which is US$5/MT lower than last week and the declining percentage is 0.45%. The average price of 2.0*1219*C(slit edge) in the Foshan market is US$1,040/MT(plus taxes) which decreases by US$9/MT compared to last week and the declining percentage is 0.89%.


No quotation or higher price. Why does the price rise in April? 

After two days of rising, the stainless steel market still expects more price ups. The price is boosting. The Wuxi market increases $7-14/ton of the products generally, while the Southern China market is not opened fully, all inquires are quoted an increasing price, so the quoting price rises significantly.

Why the price is rising in April? Will it lack of stock? Or is the price rebounding because of bottom-fishing?
 
The production of March and April
continuously increase.

March, the production of stainless steel sheet crude steel is about 2.111 million tons, which is 324 thousand tons more than last month and the increasing percentage is 18.1%. Compared to March of last year, the production falls 243 thousand tons and the declining percentage is 10.3%.  



Most of the mills have been back to normal production in March, leading to a large increase in production. The production of coil and strip increase by 49 thousand tons and 175 thousand tons respectively. In April, the production is predicted to keep increasing by 26 thousand tons and the rising percentage is 1.2% which is 230 thousand tons less than last year and the percentage is 9.7%.

 
The production of stainless steel sheet crude steel (Unit: thousand tons)

In March, GQKJ has returned to normal production. Therefore, the production of 300 series stainless steel sheet crude steel increases by 30 thousand tons and rises to 947 thousand tons, and the rising percentage is 5.9%. But compared to March of the last year, it decreases by 180 thousand tons and the declining percentage is 16%. In April, the production of the 300 series will decrease by 33 thousand tons and decrease to 914 thousand tons, which is 160 thousand tons less than last year, and the declining percentage is 14.9%. 
The actual consuming volume of March is predicted to drop 1.3% YOY!

Domestic production of stainless steel sheet drops 11.9%. Counting the consumption in the same period of 2019 when the importing and exporting volume was 65 thousand tons and 220 thousand tons respectively on, the apparent consumption is about 1,640 tons which is 15.7% less than the same period of the last year. The actual consumption is predicted to be around 1,740 thousand tons which is year-on-year 1.3% lower.

With the spread of COVID-19, the exporting volume of March may be lower than the same period of last year, so in March, the actual consumption may be higher than the predicted number.

The reason for the better consumption in March compared to that in January and February mainly is the postponed demand for February.  
 

The actual consumption of stainless steel flat steel (Unit: thousand tons)



How is the consumption in April?

The domestic consumption of the stainless steel sheet in April increases by 1.2% compared to last month and reaches 1,817 thousand tons. In the same period of last year, the importing and exporting volume was 70 thousand tons and 220 thousand tons respectively, and with the consumption of March 2020, 1,740 thousand tons, the stocks of the market and mills in April can be calculated and predicted to keep decreasing by 73 thousand tons. Therefore, the imbalance between supply and demand will be adjusted. 

In April, the change of demand shall be noticed. 

The variables affecting the market in April mainly are the problems of the pandemic, such as the decreasing domestic stainless steel exporting volume, and less overseas demand for stainless steel products which also weakens the domestic stainless steel demand.


With the recent stainless steel price rising, the demand is stimulated and the transactions show good in the market feedback. However, there are still some downstream buyers who hold a cautious opinion. If the upturn can last for some time, there will stimulate more stocking demand under the loose monetary policy.

In short, whether the consumption will surpass the prediction, the key lies in whether the price will keep increasing.  



304 increases by $235/ton! 

It is insane that the price increased again on April 15th after the rising price several days ago. The price of stainless steel 304 of Wuxi market is increasing again. With the Tsingshan, Delong, Yongjin opening, the ascending prices are accelerating. The prices of Tsingshan, Yongjin, and Delong increased by $72/ton, $57/ton and $43/ton respectively.


Price changed for times and 304 went up to $1,775/ton!


The mills marked up. 304/2B of Delong adjusted the suggested price to $1,715/ton; 304 hot-rolled sheets of Tsingshan rose to $1,700/ton and the 304 strips increased by $57/ton to $1,660/ton and immediately closed the transfer; as for 304/2B(4 feet) of Yongjin who gave the suggested price at $1,725/ton. 

Of the stocks market, in Wuxi market, 4-feet mill edge of Delong and Chengde increased the price from $1,670/ton to $1,715/ton; 4-feet mill edge of Hongwang also ascended the price from $1,715/ton to $1,740/ton; 4-feet mill edge of Yongjin generally rose to $1,725/ton- $1,740/ton. As for the hot-rolled market, the base price of 5-feet mill edge Ess and GQKJ went up to $1,685/ton as well.  
 
Since last Friday, the price of stainless steel has shown an ascending tendency. Till April 16th, for four consecutive days,  the stainless steel price has increased by $143/ton!
 
Then, what stimulated the boost of stainless steel prices?

From the perspective of the industry, the two major reasons below are the answer we think.

1. The price has dropped significantly, which brings out the need for a rebound in price.
Compared between the prices of stainless steel and nickel futures, SS2006 has decreased from $1,865/ton to $1,605/ton after the spring festival, the declining percentage is as high as 17.3%. But the SMM nickel which dropped less, the nickel 2006 has declined from 13,660 to 11,670, and the declining percentage is 14.7%. The much the price dropped, the stronger the need for ascending price.

Besides, the stainless steel stock is comparatively smaller where the price is easier to boost, as long as there is capital flow into the market. Recently, the open interest of SS2006  has increased by 4,000 shares, and the increasing percentage reaches 9%. The capital flow becomes the main driving force of the increasing stock price.

2. The mills boost the price.  
After the spring festival, the stainless steel price has plunged. The 304 cash commodity has decreased by $272/ton and the declining percentage is 14%. The drop of stainless steel price also suppressed the price of raw material side, of which the high nickel iron declined 10% in price. But it is still way less than the drop of stainless steel price, so it leads to the shrinking profit margin of the mills. According to the profit of 304, compared to the profit margin of $172/ton before the spring festival, the mills are now forced to the break-even point. It is reasonable that Tsingshan and other mills are unwilling to sell at low but boosting the price proactively. The evidence that the mills have increased the price in these days can support this point. 
 
Cost trending of stainless steel 304/2B(Unit: $/ton)

During the long-term fall, the pressure of cost has suffocated the mills who are eager to a rising price to relieve themselves. The market also needs a relief as we can see that the transactions and orders tend to the good side after the price increased.

Why did the mills boost the price at the moment?

The inflection point has come to the inventory market. After the spring festival, the market has trapped in negative demand, making the stainless steel commodity overstocked until the second half of March and in April, the demand turns to enlarge and consuming the inventory.
  
According to the inventory data, the inventory of Wuxi market in the first half of March was 85% higher than that in January. However, the latest inventory data of Wuxi market is around 572.3 thousand tons which is 11% less than the highest point after the spring festival. When the inventory is consuming largely, to increase the price can lower down the stress of sell-off and is beneficial to attract the buyers to enter the market to further stimulate the demand, giving rise to the phenomena of running after rising.
 
The weekly inventory of Wuxi market (Unit: thousand tons)

The market hesitated as the price rose. The mills increased the price and also closed the stock market. Although the prices and quantity has risen both, how long this increase will last is still unknown. There is an opinion that if the market can operate safely till the next open of Tsingshan stock, the price must climb again.

Nevertheless, the risk is laying under the increasing price of stainless steel.

Firstly, the overseas pandemic does not seem to be controlled well. Form the point of the macroeconomy, it is not the right time to rebound in a “V” shape for stainless steel price. For now, the speed of rising prices is large, which is of risk to cut down the price.

Besides, on April 15th, the futures of SS2006 was down from the highest point of $1,805/ton, knocking of $57/ton, which is an evidence of the price limit. The cost of 304/2B was $1,775/ton at that time, so people would like to sell at or above $1,805/ton.

However, the risk comes along with the increasing price, cautiousness shall be remembered in our hearts.





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