China’s domestic stainless steel market strengthens on mills’ higher list prices

China’s domestic stainless steel prices rose to their highest in four-and-a-half years over the past week after producers made upward adjustments to their list prices.

Domestic
Stainless steel cold-rolled coil 2mm grade 304 domestic (Wuxi): 16,900-17,500 ($2,609-2,701) per tonne, up by 300 yuan per tonne

Prices were last at these levels in December 2016, according to Fastmarkets’ data.

High production costs led stainless steel producers to raise their ex-works prices, sources said.

For instance, a major mill in eastern China on Wednesday June 23 raised its list price for grade 304 CRC by 500 yuan per tonne to 16,500 yuan per tonne ex-works.

Costlier nickel is the main contributor of the higher production costs.

The three-month nickel contract on the London Metal Exchange ended the official trading session on Wednesday at $17,869 per tonne, up by $350 per tonne from $17,519 per tonne a week earlier.

Fastmarkets’ weekly assessment for nickel pig iron, high-grade NPI content 10-15%, spot, ddp China was 1,175-1,195 yuan per nickel unit on June 18, up by 10-15 yuan per nickel unit from a week earlier and 45-50 yuan per nickel unit higher than on May 28.

Some cold-rolled mills also supplied more stainless CRC to foreign buyers because of better margins, and this reduces the supply of CRC in China’s domestic market. This is another factor that pushed up local prices, sources said.

“Steel mills and large suppliers are not actively selling due to their positive outlook for prices, which tightens spot market supply even more,” a trader in Wuxi said.

But he is not very bullish about the market because end users have slowed down their procurement rates.

Furthermore, China’s Ministry of Industry & Information Technology is monitoring prices for commodities, including steel, to curb “abnormal” changes, he noted.

Exports
Stainless steel cold-rolled coil 2mm grade 304 export: $2,750-2,780 per tonne fob China, down by $50-110 per tonne
Stainless hot-rolled coil grade 304 export: $2,650-2,660 per tonne fob China, down by $50-80 per tonne

Steel mills are offering stainless CRC at a wide range of $2,750-2,940 per tonne fob this week. Deals were concluded at $2,750-2,780 per tonne fob in the past week, sources said.

Stainless HRC is being offered at $2,650-2,780 per tonne fob this week. Market participants indicated that $2,650-2,660 per tonne fob was a workable price range in the past week.

“High-priced cargoes can’t compete with supply from other regions. Deals are hard to be concluded at high offers,” an export trader in eastern China said.

While there has been talk of the possibility of an export tax being imposed on Chinese steel exports, some market participants in China are not expecting one to emerge anytime soon for stainless steel because the removal of the rebate on value-added tax paid on outbound shipments in May has slowed the outflow of cargoes to overseas markets.

China exported 366,200 tonnes of stainless steel in May, down by 44,300 tonnes or 10.79% from April, according to Chinese customs data.

But others are cautious and continued to ask buyers to shoulder any possible cost should a duty be imposed.

Import
Stainless steel cold-rolled coil 2mm grade 304 import: $2,780-2,820 per tonne cif East Asia, up by $50-60 per tonne
Stainless steel hot-rolled coil grade 304 import: $2,600-2,620 per tonne cif East Asia, unchanged

Indonesian stainless CRC offers rose to $2,810-2,820 per tonne cif East Asia during the week, which led to higher transaction prices than a week earlier.

Chinese stainless CRC was offered as low as $2,780 per tonne cif during the week, which made such cargoes more attractive to East Asian buyers.

Transaction prices for Indonesian HRC remained flat at $2,600-2,620 per tonne fob. China was an active buyer of such cargoes.

China imported 302,600 tonnes of stainless steel in May, up by 78,100 tonnes – or 34.83% – from April, according to Chinese customs data.