Posted on 26 Aug 2022
Stainless steel futures prices on China's leading exchange are strengthening these days and yet, Chinese spot prices of 304-grade stainless steel assessed by Mysteel continue to soften, posting another on-week decline over August 17-24, the latest data show. Stainless demand among users is still weak and this was responsible for the price dip, according to market sources.
As of August 24, 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 a near 16-month low of Yuan 16,300/tonne ($2,379/t), losing another Yuan 400/t on week, Mysteel's latest survey showed.
Similarly, the spot price of 304/No.1 5mm stainless hot-rolled coil (HRC) in Wuxi had eased too over the survey period, slipping by Yuan 100/t on week to Yuan 15,400/t in-warehouse and including the 13% VAT as of August 24, also touching its lowest level since April 2021.
Yet futures prices of stainless flat products have headed in the opposite direction this week, in parallel with those of other ferrous commodities, Mysteel Global noted, all boosted by the policy of China's central bank to stabilize and revive the housing market.
The most-traded stainless futures contract on the Shanghai Futures Exchange for October delivery closed at Yuan 15,240/t on August 24, recovering by Yuan 200/t from the settlement price on August 17. On Monday the People's Bank of China called on financial institutions, especially major state-owned banks, to ensure the reasonable financing needs of real estate were covered, as reported.
"Although stainless futures prices were fueled by the news, it has had little impact on the spot market," a Shanghai-based market watcher said. "We learned that most traders are still adopting a bearish stance as it is hard to see much recovery in stainless demand in the short run," he added.
As a result, these traders still tended to keep their stock levels of stainless products low, by reducing their replenishment and facilitating sales by their lower selling prices, according to him.
Over August 12-18, total inventories of 300-series stainless CRC and HRC at commercial warehouses in Wuxi and Foshan in South China's Guangdong were 7.7% higher on year at 415,101 tonnes, though the total had dipped by 3.2% on week, Mysteel's latest survey showed.
"In the near term, 304 stainless prices will lack the momentum from the demand side to rebound," the source commented.
Source:Mysteel Global
