After Indonesia’s ferronickel production increased and Indonesia’s Delong production plummeted, Indonesia’s ferronickel supply surplus intensified. In the case of profitable domestic ferronickel production, the production will increase after the Spring Festival, resulting in a surplus situation for ferronickel as a whole. After the holiday, the prices of stainless steel market continue to decline, forcing steel mills to slow down the pace of procurement, while depressing procurement prices; Ferronickel factories and traders frequently cut prices after the festival to beat the competition. In March, it is expected that ferronickel plants will not reduce production, and the oversupply will expand, adding to the current high inventory of ferronickel owned by domestic ferronickel plants and some steel plants, while the stainless steel project is still at a loss. It is bound to further depress the price of ferronickel procurement, and the price of ferronickel may fall to around 1250 yuan/nickel.
In March, ferrochrome production continued to increase, speculative resources needed to be digested, and the momentum for further increases in ferrochrome prices became weaker. However, supported by costs, there was limited room for decline. Stainless Steel Spot Network estimated that ferrochrome prices might be weak and stable.
In February, the production and downstream demand of domestic steel mills recovered compared to the Spring Festival period, but the market demand did not meet expectations. Moreover, overseas export orders were poor, and downstream purchasing willingness was moderate. Steel mills and the market were slow to remove inventory, and the trend of stainless steel spot prices rose first and then suppressed.
Supported by strong macro expectations and confidence in improving demand, steel mills did not significantly reduce production during the off-season in January to February, while export orders shrank on the demand side in January to February, resulting in an insignificant increase in domestic demand, resulting in continued high levels of steel mill inventory and market inventory.
In March, steel mills were forced by high prices of raw materials. Although they were aware of the high cost and loss situation, they had to accelerate production and consume high prices of raw materials. The motivation for reducing production in March was not sufficient. With the commencement of major infrastructure projects, the demand for hot rolling in March continues to stabilize, while the demand for civil cold rolling can gradually increase, but it still requires time and market guidance. High production and high inventory will be the main tone in March, and the contradiction between supply and demand is difficult to quickly change.
In summary, the price of stainless steel in March is constrained by the contradiction between supply and demand, which cannot be alleviated. The rational correction of raw materials has led to a downward trend in stainless steel costs. The trend of stainless steel prices in March may be the main tone.
Post time: Mar-22-2023