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Rapid increase in spot prices of stainless steel

06 Jul,2023

Mysteel High Nickel Iron Index Settlement Price (2023.7.20)
On July 20th, the tax inclusive index price of Mysteel's high nickel iron arrived at the factory was 1066.4 yuan/nickel, which was unchanged from the 19th; The Indonesian nickel iron cabin bottom tax index price is 1060 yuan/nickel, which is unchanged from the 19th.
Today's Headlines
Overview: Driven by the upward trend of futures contracts, the market transaction atmosphere improved on the 20th, and currently there is limited inventory pressure on the trading end. The combination of the two has led to a rapid increase in the price of stainless steel spot.
Futures contract prices are rapidly rising to recent highs
Since late June, the main contract prices of stainless steel futures have shown a fluctuating upward trend. On July 20th, under the influence of macro factors and some rumors of nickel and iron, both nickel and stainless steel main contracts have shown significant increases. As of the end of the afternoon, the price of stainless steel main contracts was reported at 15375 yuan/ton, up 415 yuan/ton, up 2.77%, the highest point in nearly two months. Under the atmosphere of significant increase, the spot trading has improved.
Low level accumulation of stainless steel inventory
In terms of social inventory: the overall trend of stainless steel from June 2023 to the present shows a W trend. The stock accumulation on June 22 is mainly due to the Dragon Boat Festival holiday, and the stock level in the rest of the time basically remains low. The main reason for this accumulation is (1) poor demand for stainless steel and limited transactions, and (2) the arrival of stainless steel resources, resulting in an accumulation of social inventory. Although there have been hoards of social inventory, the inventory level remains at a low level since 2023.
As of July 13, 2023, the latest social inventory of stainless steel this week was 1.01 million tons, a 3% increase compared to the previous week. The main growth drivers were the 400 series and 300 series, with a maximum increase of 13% for the 400 series and 6% for the 300 series.
Under the improved transaction atmosphere, spot prices have significantly increased
At present, the market is relatively optimistic about the "nine gold and ten silver" market, with a general preference for expectations. In addition, on the 20th, driven by a significant increase in market prices, sentiment further improved. Some wait-and-see orders entered the market for procurement, and the morning spot trading atmosphere significantly improved. Merchants have tentatively raised the spot price by 50-100 yuan/ton. In the afternoon, due to the relatively low spot inventory of some traders, market prices were further raised, and downstream acceptance began to decline, leading to a weakening of the trading atmosphere. As of 4pm on the 20th, the mainstream price of private 304 cold rolled wool base in the Wuxi market reached 14750-14850 yuan/ton, while the mainstream price of private 304 hot rolled five foot rough edge reached 14300-14400 yuan/ton, an increase of 200-250 yuan/ton compared to the previous day.
Overall, prices on the 20th have significantly increased compared to the previous period, and transactions have also shown a significant improvement compared to the previous period. However, in the light trading atmosphere in the afternoon, the market is generally cautious about prices in late July.
Normal inventory levels and limited market pressure
According to Mysteel research, as of July 20th, the inventory of 300 series in the Wuxi market was 394000 tons, an increase of 0.59% on a weekly basis. Among them, the 300 series cold rolling circumferential ratio increased by 0.71%, and the 300 series hot rolling circumferential ratio