SHANGHAI, Sep 15 (SMM) - In August, extremely hot weather occurred across China, and steel mills temporarily suspended the production due to the power rationing, hence the output dropped slightly more than expected on the basis of existing production reduction plans. As such, the spot prices dropped slowly in August with a monthly fall of 600 yuan/mt. In addition, the social and in-plant stainless steel inventory both fell at a faster pace compared with that in July. But the transactions were mostly made with the traders, and the demand has not been transmitted to the terminal end yet. The overall stainless steel market was weak throughout August.
Looking into September, on the cost side, the NPI prices now fluctuate at a low level, and a large number of low-priced Indonesia NPI returns to China, sustaining the situation of oversupply and keeping squeezing the market shares of domestic manufacturers. But NPI prices are likely to rebound slightly. Ferrochrome prices are still on the downward track, and the manufacturers suffer losses amid high production cost. Nonetheless, ferrochrome prices are likely to rally with expected production cuts. In terms of the stainless steel spot market, steel mills frequently raised their prices in early September and suspended making transactions several times. With the festival atmosphere, the spot prices of stainless steel rose palpably. In terms of supply, although the return of Indonesia stainless steel has been lower than expected, stainless steel mills resume the production more than expected due to restoring profitability. The overall supply is likely to increase in September. On the demand side, the market still has certain expectations for the traditional seasonal high on the consumption side, and the terminal demand has recovered slightly. Specifically, due to the temporary suspension and reduction of production by overseas steel mills, overseas demand has increased significantly. SMM believes that stainless steel prices will remain rangebound in September with expected increase in both supply and demand. The consumption recovery is worth attention in the future.