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Weekly Averagrd Price|| Stainless Steel on Board and the Price Dropped Stealthily. Stainless Steel Market Summary in China (1st, June – 5th, June)




304/2B:The average price of 2.0*1219*C (slit edge) of ZPSS in the Wuxi market is US$1,895/MT(plus taxes) which is US$4/MT less than last week and the declining percentage is 0.21%. Besides. The average price of 2.0*1219*C(slit edge) in the Foshan market is US$1,935/MT(plus taxes) which is also US$4/MT less than last week and the decreasing percentage is 0.21%.

304/2B:The average price of 2.0*1240*C (mill edge) of Hongwang in the Wuxi market is US$1,830/MT(plus taxes) which is US$14/MT lower than last week and the declining percentage is 0.74%. Besides, the average price of 2.0*1240*C(mill edge) in the Foshan market is US$1,820/MT(plus taxes) which is US$6/MT higher than last week and the rising percentage is 0.3%.

304/No.1: The average price of 4.0*1520*C (mill edge) of ESS in the Wuxi market is US$1,760/MT(plus taxes) which decreased by US$6/MT compared with last week and the declining percentage is 0.31%. Furthermore, the average price of 4.0*1520*C(mill edge) in the Foshan market is US$1,790/MT(plus taxes) which is US$4/MT less than last week and the decreasing percentage is 0.23%.

316L/2B: This week, the average price of 2.0*1219*C of TISCO in the Wuxi market is US$2,655/MT(plus taxes) which dropped US$9/MT compared with last week and the decreasing percentage is 0.30%. Moreover, the average price of 2.0*1219*C(slit edge) of TISCO in the Foshan market is US$2,710/MT(plus taxes) which is US$9/MT less than last week and the declining percentage is 0.29%.

316L/No.1: This week, the average price of 4.0*1500*C(mill edge) of ESS in the Wuxi market is US$2,495/MT(plus taxes) which is US$8/MT less than last week and the decreasing percentage is 0.27%. What's more, the average price of 4.0*1500*C(mill edge) in the Foshan market is US$2,515/MT(plus taxes) which is US$9/MT less than last week and the declining percentage is 0.32%.
 
201/2B: This week, the average price of 1.0*1240*C(mill edge) of the Hongwang in Wuxi market is US$1,065/MT(plus taxes) which is US$9/MT higher than last week and the rising percentage is 0.80%. Besides, the tax-inclusive average price of the Foshan market is US$1,040/MT(mill edge) which increases by US$13/MT compared to last week and the increasing percentage is 1.24%.

J2, J5/2B: The average price of 1.0*1219*C(mill edge) of the Wuxi market is US$1,020/MT(plus taxes) which is US$8/MT higher than last week and the rising percentage is 0.84%. Besides, the tax-inclusive average price of the Foshan market is US$1,010/MT(mill edge) which increases by US$16/MT compared with last week and the rising percentage is 1.58%.

430/2B: The average price of 2.0*1219*C(slit edge) of TISCO in the Wuxi market is US$1,005/MT(plus tax), which is US$6/MT higher than last week and the rising percentage is 0.57%. The average price of 2.0*1219*C(slit edge) in the Foshan market is US$1,015/MT(plus taxes) which increased by US$7/MT and the rising percentage is 0.71%.



Ore ban pushed the price up by 6%. Will stainless steel price increase as well?

Last weekend, important news from the peripheral market that the major oil-producing countries finally reached a consensus on postponing the first-phase production cut agreement for one month, and Vale suspended production at three mines. 



Among them, the biggest impact on the market today is the suspension of production in three mining areas in Vale. According to Reuters, because 188 workers are tested the COVID-19 positive, on Friday, Brazil’s Third District Court commanded Vale to suspend production at the Itabira complex (conceição, Cauê, and Periquito), which will reduce at least 10% of the production in Vale.  



The good news stimulation pulled up the futures price of iron ore futures.

Influenced by the suspension, the price of domestic iron ore increased dramatically on Monday opening. The rising percentage closed to 5% in a short period, and the rise expanded to 7% in a day. After that, the price changed slightly. Until midday close, the iron ore 2009 contract increased by 6.54% to $205/MT. Compared with the low price of $175/MT in early April, the price is 44% higher.   



Compared with iron ore futures, HRB was in a weak trend. Although the domestic demand is stable and keeps consuming the inventory, the production continues to rise (according to CISA, in late May 2020, the production of crude steel by major steel producers is 23,017.6 thousand tons which increases by 4.39% compared with the same period of 2019. ), which put pressure on the rising price. For now, compared with the price in early April, RB2010 has risen by 17% which is weaker than the iron ore futures.



This situation recalls the boost of iron ore price in 2019. From the beginning of 2019 to July 2019, domestic iron ore futures price soared from $170/MT to $225/MT and the rising percentage was up to 85%. The sharp increase of the raw material price of iron ore led to the shrinking profit margin of domestic steel enterprises.  

At this moment, some stainless steel industry experts said that the stainless steel market now is similar to plain carbon steel. Both are high in raw material price but the product price is comparatively low, which suppresses the mills’ profit highly.  

LME nickel price keeps rising lately. Until midday close today, LME nickel price has increased to $12,975/MT. Compared with the low-pin $12,100/MT in late May, it has increased by $875/MT and the rising percentage reached 7.2%. While in China's nickel market and stainless steel futures market, the prices are weak. Shanghai nickel 2008 increased by 4.1% only in the same period of increasing LME nickel price, and stainless steel futures 2008 dropped by $1/MT. 



 


Under the high raw material price and weak stainless steel price, the profitable space for China’s stainless steel enterprises is squeezed continuously. According to our model, the plain cost of cold-rolled 304 is $1,890/MT, and the cost of ferronickel is $1,855/MT. Compared with the price of state-owned cold-rolled 304 which is $1,885/MT, the mills are already in a slight loss in plain cost smelting methods.   

 

Will the stainless steel price makeup and increase later?

Some experts believe that there is a space for stainless steel prices to increase because the stainless steel inventory is being consumed, the stress from the inventory backlog is not heavy. Besides, with the high cost of raw material, the profit margin for mills is small and the mills will find the right time to drive the price up to make up the profit. Therefore, it is of a large possibility that the mills will push prices of stocks growing. 

On the other hand, there will be more positive signs from the peripheral market. With the restart of the major economies of Europe and the US, more demands are recovering. LME copper keeps breaking the new highest lately. An institute thinks that copper enters a new bull market, which will boost the stainless steel market.
 

There is also a view of declining stainless steel prices in the future market.

1. Although the stainless steel price is declining, compared with early June, the consuming speed is slowing and the demand is falling. Also, there are loads of resources on board, the stress of inventory backlog. The mills will take this chance to knock the raw material price down, then the market will face a declining risk.

2. In April, due to the effect of the overseas epidemic, the import of nickel ore and ferronickel decline. But when the epidemic is easing, the supply will recover. With Tsingshan, Delong and other enterprises will put production into the new Indonesian ferronickel project. The supply of Indonesian ferronickel supply will increase and impact on the Chinese market. The high price of raw material might no longer insist, which will change the stainless steel market.


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