Supply and Demand are Both Weak, Stainless Steel Spot Prices Fluctuate Narrowly
Jun 25, 2024
FOSHAN JIANBAN YI STAINLESS STEEL CO., LTD.
The stainless steel prices have been operating weakly this week, with trading activities being subdued. Downstream demand remains weak, and social inventory continues to accumulate. The raw material prices are under pressure and have fallen back, but still support the stainless steel prices. The profit margins of steel mills are marginal, and production remains at a high level. The focus for the subsequent market will be on the production and delivery pace of steel mills, the stimulus intensity of domestic macroeconomic policies, with expectations that the stainless steel market will continue to operate weakly and fluctuate.
On the spot market, the stainless steel spot prices have slightly decreased this week. The current downstream consumption demand for stainless steel is still weak, with no significant stimulus to boost it. With the continuous arrival of steel mill shipments, social inventory continues to accumulate, and the digestion capacity needs to be strengthened.
This week, the raw material market was slightly under pressure, and the production cost of steel mills has slightly decreased, but profits are still marginal. The production of steel mills in June was less than expected, with an estimated reduction of 80,000 to 100,000 tons, and the production expectation for July will remain the same, with a slight reduction possible.
The news of steel mill production cuts in the middle of the week stimulated the market, which is still sensitive to supply-side changes. The overall transaction performance within the week is still weak, with many traders making concessions to sell goods, and the market confidence is insufficient to stimulate transactions. The steel mill's price limit has increased the difficulty of agents selling goods, but the arrival of steel mill shipments has been discounted, so the inventory pressure is not too great.
As the center of futures prices moves down, it is possible that low-priced warehouse receipt resources will flow into the spot market. The market needs to pay close attention to the steel mill's production plan, the market delivery pace, and the speed of social inventory reduction in the later stage.
| Steel Grade | Week 25 | Week 24 | Change | Rate of Change |
|---|---|---|---|---|
| 304-316-301-201 | 0.03-0.5 | 650 and below | -137.5 | -1.67% |
This week, the registered warehouse receipt inventory of stainless steel at the Shanghai Futures Exchange increased by 2989 to 190,310 tons compared to last week. This week's warehouse receipt volume has increased significantly, breaking through 190,000. The warehouse receipt resources have brought considerable pressure to the market inventory, and the market's digestion capacity is limited, with the inventory reduction speed being slow.
In summary, this week's stainless steel prices have fluctuated weakly. The raw material prices have fallen back but are still high, and the steel mill's production profits are at the cost margin, with production still at a high level. The overall transaction atmosphere in the market is average, the off-season downstream consumption demand is weak, the overall digestion capacity is limited, and the market social inventory continues to accumulate. The market still faces the pressure of accumulating inventory.
The market will continue to focus on the speed of social inventory reduction and the subsequent production and delivery pace of steel mills. The expectation is that the stainless steel market will continue to operate weakly and fluctuate.
The copyright of this report belongs to Guotou Anxin Futures Co., Ltd. Without written permission, no institution or individual may reproduce or publish it in any form.
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