Stainless Steel Inventory Reduction Over 20,000 Tons! 🌬️ Is the Spring Breeze Coming for Stainless Steel?

Introduction: After breaking below the 14,000 threshold on June 13, stainless steel futures have been fluctuating at a low level. This morning, the market quickly rose to above 14,000 yuan/ton, and by the close on June 27, the main stainless steel contract had risen by 0.79% to 14,000 yuan/ton. So, can the stainless steel market usher in a phase of improvement?

Nickel Ore Prices Remain Firm 💎

At the beginning of June, the Indonesian government approved an average of 240 million tons of nickel ore quota per year for a three-year period RKAB. Although the approved quota is close to the annual demand of 250 million tons, it is understood that some quotas are newly approved and cannot be effectively transformed into actual nickel ore production capacity in the short term. Coupled with the fact that the rainfall and frequency in some areas of Indonesia have increased significantly compared to the same period last year, affecting the progress of local mining, nickel ore prices remain firm, providing bottom support for ferronickel prices. However, it should be noted that if the subsequent approval volume of nickel ore increases, it may be bearish for ore prices.

Nickel Iron Supply Contracting 📉

In May, China's nickel iron imports decreased significantly month-on-month, and the supply of nickel iron is still in a state of contraction. There is no new purchase price this week, and due to the decline in the price of finished products, the profit space of steel mills has narrowed. The steel mills maintain a price-pressing attitude towards the purchase of nickel iron, and the supply and demand sides are in a game. It is necessary to pay attention to the latest market transaction dynamics and the situation of Indonesian nickel iron backflow. In terms of prices, on June 27, the Mysteel domestic arrival price for high nickel iron was reduced by 5 yuan to 975-985 yuan/nickel.

Chromium Iron Prices Stable 🔩

Recently, the overall price of chromite has been stable, and many steel mills' high carbon ferrochrome steel purchase prices have been flat month-on-month. Among them, Shanxi Taigang's July high carbon ferrochrome 50 basic tons include tax to the factory purchase price of 8795 yuan, and the Qingshan Group's July long-term agreement purchase price for high carbon ferrochrome is 8995 yuan/50 basic tons (cash tax included to the factory price). The spot market price of ferrochrome is also stable, and on June 27, the Inner Mongolia high carbon ferrochrome natural block cash tax ex-factory quotation was 8900-9100 yuan/50 basic tons.

Supply Remains High 📈

On the supply side, in June, the crude steel planned output of 43 stainless steel mills nationwide was 3.3653 million tons, a monthly increase of 2.0% and an increase of 10.4% year-on-year. Among them, the 300 series increased by 2.8% month-on-month and 5.6% year-on-year. The supply side remains strong.

Social Inventory Gradually Digested 📊

In the latest inventory data (as of June 27), the total inventory of 89 warehouses nationwide decreased by 4.13% week-on-week to 1.09 million tons, with a certain degree of reduction in various series. Among them, the 300 series inventory decreased by more than 20,000 tons, mainly because the recent arrival of steel mills is still relatively small, coupled with the market's rigid demand for purchases, and some digestion of low-priced resources. At this stage, the inventory level of public warehouses and the inventory level of traders are relatively low, so the social inventory shows a downward trend.

In addition, the export of stainless steel in the first half of the year showed a growth trend, which also helped to digest some of the domestic capacity. According to the General Administration of Customs, from January to May 2024, the cumulative export volume of domestic stainless steel was about 1.912 million tons (second only to the 1.931 million tons in the same period of 2022), an increase of 12.8% year-on-year. Among them, the export trade volume to the Southeast Asian and Middle Eastern markets was particularly eye-catching.

Steel Mills Maintain a Flat Price 🏭

On the 27th, with stainless steel futures operating above 14,000 yuan/ton, Qingshan Steel Mill maintained a flat opening, and spot merchants had a slight increase in operations, with an increase of about 50 yuan/ton. The market inquiry activity has increased. As of the afternoon of June 27, the four-foot rough base of 304 cold-rolled stainless steel in Foshan was 13,550-13,650 yuan/ton, and the five-foot rough edge of 304 hot-rolled was 13,300-13,400 yuan/ton.