Posted on 11 Aug 2022
Chinese spot prices of 304-grade stainless steel under Mysteel's regular survey declined continuously during August 2-9, reflecting the fact that some traders had to trim their offer prices to encourage sales, given the mediocre trading in the physical market, according to industry sources.
As of August 9, the spot price of 304/2B 2mm stainless cold-rolled coil (CRC) in Wuxi, a major stainless trading hub in East China's Jiangsu, had dropped to Yuan 17,100/tonne ($2,530/t), being Yuan 200/t lower on week and hitting a new low since May 2021, Mysteel's survey showed.
Similarly for 304/No.1 5mm stainless hot-rolled coil (HRC), the spot price in Wuxi came in at a 15-month low of Yuan 15,800/t in-warehouse and including the 13% VAT on August 9, easing by another Yuan 350/t on week.
Stainless consumption among most end-users was still low amid China's scorching weather, so over the period most remained indifferent to buying, according to a Shanghai-based market watcher, even though stainless futures strengthened during the opening few days of this month.
The most-traded stainless futures contract on the Shanghai Futures Exchange for delivery this September steadily climbed over August 2-5 to close at Yuan 16,280/t on August 5, before retreating to Yuan 15,580/t by August 9.
With their sentiment being buoyed by the short-lived increase in stainless futures prices, a small number of traders whose stocks were low at that time chose to make some purchases, as reported, while end-users remained unmoved.
"We saw many traders attempt to boost sales by lowering their prices," the source said. Nevertheless, "stainless users will only enter the market for procurement if prices show signs of rising, not when they're sliding downward," he added.
The source predicted that prices of 304-grade stainless will most likely soften in the short term due to the supply-demand imbalance, as retail stainless stocks currently were quite high. Arrivals at traders' warehouses this month should be around the same as last month or might even rise – at a time when end-user demand is dull, he warned.
Total inventories of 300-series stainless CRC and HRC at commercial warehouses in Wuxi and Foshan in South China's Guangdong mounted by 4.6% on week to 432,214 tonnes over July 29-August 4, Mysteel's latest survey showed. The volume was also 19.7% higher than the same period last year.
Meanwhile, Mysteel's other survey indicated that the 40 Chinese stainless producers sampled will produce about 2.4 million tonnes of crude stainless steel this month, down by 3.6% on month or 17.6% on year. Within that total however, output of 300-series products will rise by 2.8% from July to 1.4 million tonnes.
Source:Mysteel Global
