China's 304 stainless CRC prices suffer broad decline

Spot prices for 304-grade stainless steel tracked Shanghai futures prices during November 13-19 and mostly softened further in China's major trading hubs, the results of Mysteel's latest survey showed. The exception was cold-rolled coil (CRC) of the same grade in East China's Wuxi whose prices held firm.

On November 19, the spot price of 304/2B 2*1240mm stainless CRC in Wuxi produced by stainless roller Hongwang Stainless was assessed by Mysteel at Yuan 12,700/tonne ($1,787/t) in-warehouse and including the 13% VAT, unchanged from a week earlier. On the same day, Mysteel assessed the price of the same grade and same spec in Foshan city in South China at Yuan 12,650/t in-warehouse and including the 13% VAT, lower by Yuan 50/t from a week earlier.

Also on November 19, the in-warehouse price of 304-grade Tsingshan 5*1520mm stainless hot-rolled coil in both Wuxi and Foshan stood at Yuan 12,100/t including tax, lower by Yuan 100/t on week, Mysteel's assessment shows.

Falling futures prices undermined market confidence, weighing down spot prices during the survey week, sources said. On November 19, the price of the most-traded stainless steel contract for next January delivery closed the daytime trading session at Yuan 12,335/t, a Yuan 150/t on-week retreat, according to the bourse's data.

Subdued demand also muted trading and dragged down prices, said an analyst based in Wuxi city.

In contrast, 304-grade CRC prices in Wuxi remained stable during the survey week, supported by a key market intervention from the country's leading stainless producer, Tsingshan Group. On November 18 Tsingshan had set a price floor for its agents and this helped stem the decline in spot prices, the Wuxi analyst explained.

Notably, stainless mills are enjoying higher profit margins even as prices pull back, thanks to a sharp decline in raw material costs, Mysteel Global observed.

As of November 19, Chinese producers of 304-grade stainless CRC that use outsourced high-grade nickel pig iron had enjoyed an average gross margin of around Yuan 81 on every tonne of CRC sold, according to Mysteel's assessment.

Source:Mysteel Global