SMM Analysis: A Qucik Look into Why Stainless Steel Prices Surged post CNY Holiday
12:07 Feb 15, 2022 Source: SMM

SHAGNHAI, Feb 15 (SMM) - SMM Presumes that reasons for the stainless steel futures’ increase after the Spring Festival are as follows:

On the supply side, firstly, domestic new stainless steel project has not been put into production as expected. 1.35 million mt project of Xiangshui has been postponed continuously since the end of 2021, and it has been changed to plain carbon steel project. It is expected that it may be converted to stainless steel after June this year. Secondly, stainless steel project (capacity of 410,000 mt) of Dainan was put into trial production on February 9th and the entry into production was weaker than originally anticipated. Thirdly, new capacity production in Indonesia is expected to commence in Q2, with limited supply in the short term and incremental supply relying mainly on the recovery of domestic production.

On the demand side, in the short term, downstream stockpiling before the festival is limited, spot inventory declines, and social inventory accumulation after the festival is not obvious. The procurement is gradually started in this week and next week. SMM expects purchasing spot will continue, and spot prices support will be strong. Meanwhile, the SSE's warehouse receipts continue to increase, affecting the amount of available spots to a certain degree. Demand continues to recover in the medium term. It is difficult for stainless steel inventories to accumulate significantly against the backdrop of continued strong demand from infrastructure and other sectors. In Q2, attention should be paid to the time when new projects will be put into production and enter the market. It is preliminarily estimated that the spot pressure will increase in June.

In terms of cost, NPI in stainless steel demand recovery and tightened spot supply will have strong prices. SMM anticipates the refined nickel will be strong regardless of the continuous decrease of stocks of pure nickel.

Key Words:  stainless steel 
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