NEWS

At the end of the May 1st holiday, the spot price of stainless steel has finally reached a stable period. There is room for a small increase, but the room for decline is relatively limited. Market traders are finally emboldened to stop running goods at low prices. However, can this situation be sustained?

1. The output of stainless steel cold rolling continues to increase

　　According to Mysteel's research, the cold-rolled output of 34 domestic cold-rolled stainless steel plants in May 2023 is expected to be 1.2725 million tons, which is expected to increase by 12.62% sequentially and 4.66% year-on-year.The trend of increasing production in May in all departments is that, on the one hand, the futures orders of steel mills in April are OK, which has led to relatively sufficient confidence in steel mills; on the other hand, there is still some profit margin at the steel mills end, and the operation of production reduction may not be completed yet. The time has come.

2. Downstream demand is relatively optimistic and stable

　　Although social inventory has been in the base warehouse since the May Day holiday, it is because of the stagnation of the holiday.It has been in the process of digestion in the early stage, which means that the downstream demand is still there, but it is not as intense as we have seen. Basically, it is based on a small number of multiple purchases, and there can be signs of consumption, but under the premise of relatively large supply, the effect is not particularly obvious.

　　It is understood that in the past two months (April-May), the orders of the rolling mill and the pipe mill have been acceptable. There is no queuing situation, but it can basically meet the production situation. On the other hand, the downstream demand is actually relatively optimistic, and it is not as pessimistic as imagined. It may just take some time or a psychological price to arrive.

3. The possibility of active price reduction under the support of raw material costs is low

　　The latest transaction price of nickel-iron has reached 1,160 yuan/nickel, and it has been trending upward after bottoming out; and Inner Mongolia's high-carbon ferrochrome natural block cash price including tax is 8900-9100 yuan/50 base tons, which is also showing a slight upward trend; from the raw material side, due to the increase in inquiries from steel mills for nickel-iron, the transaction is hot, and the price of nickel-iron in the short term is still supported, while the spot of ferrochrome is tight, and some iron mills are in the stage of production reduction, and the price is showing a strong operation.

　　Under the strong operation of raw material prices, the cost of stainless steel will also show an upward trend. From the perspective of steel mills, in order to ensure profit margins, spot sales cannot take the initiative to sell goods at low prices. Supported by costs, there is limited room for spot prices to fall.

　　Judging from May, although the overall crude steel and cold-rolled production has increased, there are also futures orders that have been delivered in the early stage. Whether it will flow directly into the circulation market at that time is another matter. In the second quarter, the overall demand situation from April to May was relatively optimistic. Although there was no surge, it can still be maintained at a level. From the perspective of supply and demand, stainless steel still has the opportunity to show an upward trend, but from the perspective of cost and profit, the room for decline is still relatively limited, and it is estimated that there is still some hope in May!