Posted on 20 Jun 2022
Inventories of finished stainless steel at commercial warehouses in Wuxi and Foshan, China's two core stainless trading hubs, slipped for the sixth consecutive week over June 10-16, falling by another 2.5% on week to 699,707 tonnes, according to Mysteel's latest weekly survey.
Among the total, inventories in Wuxi in East China's Jiangsu province saw a faster decrease of 3.4% on week, compared with the on-week dip of just 0.5% over the prior week, while the volume in Foshan in South China's Guangdong province reversed up slightly by 0.6% from the previous week, the survey showed.
The continuing decrease was mainly attributed to the fact that many domestic traders lowered their offering prices to facilitate sales and reduce their stocks at hand, considering the poor demand from end-users and the negative sentiment prevailing in the domestic market, Mysteel Global learned.
Market participants feared that domestic stainless prices will fall further in the coming term as Chinese steel mills and traders still face great pressure on destocking, while transactions in the physical market are proving poorer than the market expected. "Many end-users adopted a wait-and-see stance or just purchased some products to meet their immediate needs," a market source in Wuxi explained.
Despite the continuous decrease over the prior several weeks, stainless inventories at traders' warehouses are still 10% higher compared with the same period last year, the survey showed.
Chinese stainless prices in both the physical and futures markets fell significantly this week, with the spot price of 304/2B 2mm stainless cold-rolled coil in Wuxi under Mysteel's assessment sliding to Yuan 19,300/tonne ($2,880/t) in-warehouse and including the 13% VAT as of June 16, down Yuan 900/t on week. In fact, many Chinese stainless traders have been operating at a loss due to the substantial fall in prices.
As of the same day, the most-traded July contract on the Shanghai Futures Exchange closed the daytime session at Yuan 17,755/t, lower by Yuan 945/t from the settlement price on June 9.
However, the weakness in the domestic stainless market may continue in the near term as demand from end-users still needs some time to recover, Mysteel Global learned.
Source:Mysteel Global
