China Stainless Steel Pricing Sentiment Appears Optimistic in the Remaining Q3 2022
- 28-Jul-2022 2:19 PM
- Journalist: Li Hua
New Delhi: Stainless steel prices are falling in the Chinese market, primarily due to weak domestic and international demand. In the spot market, Chinese Nickel ore imports fell, supporting Nickel prices, and stainless steel prices rose in response. Some traders predicted that the cost of stainless steel would gradually rise. However, the spot price of stainless steel continues to fall. Despite this, stainless steel prices are expected to increase as the monsoon season nears its end in most Chinese provinces, and demand is expected to increase in the coming weeks. The extension of infrastructure construction activities will result in a revival of demand for Stainless Steel, and corresponding prices may rise even further.
According to market participants, the decline in Nickel inventories at the London Metal Exchange (LME) center is primarily due to the gradual increase in demand for new energy vehicles; thus, lower inventory levels are driving Nickel prices higher. Furthermore, China's pure Nickel stock has dropped to its lowest level in history. Because of the low inventory, Nickel prices have risen, and stainless steel futures have followed suit. As there were few transactions in the market, the declining cost of stainless steel slowed slightly, and the price of ferroNickel gradually stabilized. However, ferroNickel mills have already begun to reduce production because the price correction is limited, resulting in continuous losses, and they are reluctant to lower prices.
At present, the demand from downstream is poor, so the situation is difficult to change in a short time. However, the price reduction has slowed down. Meanwhile, the market is expected to recover gradually in the coming months. The more significant operating pressure faced by stainless steel traders nursing mounting inventories led them to cut their prices. Additionally, Stainless Steel prices advance as the monsoon seems to be over in China and auto sales accelerate. Stainless Steel prices have rebounded firmly as higher passenger vehicle retail sales escalate hopes for recovery.
Meanwhile, Russian manufacturers are offering Stainless Steel at attractive discounts in order to cater to Asia's mass market, which may force China to reduce its Stainless Steel export duty. However, the payment system will remain a barrier because the United States removed Russia from the SWIFT payment system after it entered Ukraine.
As per ChemAnalyst, Stainless Steel production in China has remained vulnerable following the announcement of a 15% export duty on various stainless steel products. The Chinese stainless steel export market has plummeted following the imposition of export duties and the pledge to protect the environment from the harmful effects of steel production. A gradual recovery in demand may cause the price of stainless steel to skyrocket. As a result of the monsoon resuming construction activities in China, stainless steel prices are expected to skyrocket in the coming months.