The stainless steel market has been waddling. Prices of stainless steel used to change by the day, but in the recent half month, the quotations sometimes can only last for hours. Disturbed by the unstable and variable nickel price, it is more difficult to make a good purchasing decision. Price is not the only concern. China is facing the severest pandemics since 2020, and Shanghai has locked down. The lockdown does not include the Shanghai International Port, but the quarantine and regulations have made road transportation go extremely slowly. Nearby regions and provinces refused the trucks from Shanghai. It means that the delivery at or abroad will be extended. If you want to see through the complicated market, please keep reading the Stainless Steel Market Summary in China for March 21 to March 25.

TREND|| Stainless steel spot prices increased under the guise of the fluctuation of nickel price.

From March 21st to 25th,  LME nickel fluctuated from limit down to limit up, influencing the stainless steel price trend to swing. Increasing the nickel price later in the week, the stainless steel spot price also rose. The pandemic continues to shadow the market, and the trading was light. Benefited by the boost of nickel price and stainless steel futures price on Thursday, the spot price went with the trend, raising market confidence. Until March 25th, contract 2204, the stainless steel futures of April rose by US$171/MT, to US$3,500/MT, increasing by 5.7%. The price difference between spot and futures was US$10/MT, which narrowed down to US$28/MT compared to March 18th.
 

300 series of stainless steel: Transaction was weak because buyers are on the fence.

Last week, the price of stainless steel 304 increased stably. Following the fluctuations of the futures, the spot price went up quickly on March 27th. Until March 28th, the cold-rolled 4-foot stainless steel 304 quoted US$3,435/MT, US$143/MT higher than March 18th. As for the hot-rolled stainless steel 304, mainstream private-owned mills quoted US$3,385/MT, which increased by US$127/MT compared to 7 days ago. 

The transaction can hardly be turned on under the increasing prices because the quarantine increases logistic costs and prolongs the transporting time. Buyers hesitate to reach out.

The high cost of high-grade ferronickel also contributes to the high price, though it slightly decreased by US$5/ni to US$267/ni; ferrochromium rose by US$32/MT (with 50% of chromium content) to US$1,463/MT (with 50% of chromium content). In theory, the production cost is reduced, but steel mills are limited in accepting orders in April. Future production will probably be affected. 
 

200 series of stainless steel: The slack transaction weakens the price.

Same as stainless steel 304, the stainless steel 201 spot price also steadily rose last week. Until March 28th, the cold-rolled mill-edge stainless steel 201 in Wuxi increased by US$16/MT in one week, to US$1,925/MT; the price of mill-edge J2 and J5 was US$8/MT higher, reaching US$1,800/MT. As for the hot-rolled 5-foot stainless steel 201, the price remains, at around US$1,910/MT.

Influenced by the pandemic, many downstream stainless steel manufacturers have to halt or reduce production, resulting in a decrease in demand. Not to mention the burdens in logistic chains, many orders are postponed. The market once slides in silence. Some merchants even said they have no order on March 25th. The demand was tepid.

The increase in price was brought by the boost of nickel and stainless steel futures. The surge of stainless steel 304 gave support to the stainless steel 201 which slightly rose by US$16/MT. However, the increase couldn’t maintain because demand failed to keep up. The price soon stopped rising and was maintained.
 

400 series of stainless steel: Cost remains high.

Last week, the price of cold-rolled stainless steel 430 was stable. Until March 24th, the cold-rolled stainless steel 430 in Wuxi was US$1,695/MT, the same as the price on March 18th.

Though the output of high chromium increases recently, the production cost is increasing. Besides, the transporting cost also rises due to the pandemic. In a short term, the production cost of high chromium is difficult to reduce, which might stop some factories return to work. It is predicted that the output of high chromium in March is to increase by 50,000 tons ~ 60,000 tons in comparison to April.  
 

Summary: 

300 series of stainless steel: The nickel fluctuation on high is the major factor that swings the stainless steel prices. The cost of ferronickel stays high, raising the stainless steel production cost. But the pandemic limits the demand. The seesaw between the two strengths will put the stainless steel price high and fluctuate. 

200 series of stainless steel: So far the spot market of stainless steel 201 is pessimistic because the price of stainless steel 304 greatly affected the market of 201. The transaction has been bland. It is predicted that the price will remain stable recently.

400 series of stainless steel: In Wuxi, TISCO and JISCO quote stainless steel 430/2B at around US$1,700/MT, remaining as before. The transaction has been tepid, but the cost of raw materials is high, giving a good reason for the steel mills to maintain the price. The prices of chromium and coke are getting stable, weakening the ferrochromium price to rise. Some major steel mills are going to start the bid for high chromium purchases in April. The industry believes that the purchasing price will increase greatly. It is predicted that the price of 430/2B will remain at US$1,700/MT. 
 

INVENTORY|| Inventory continues to increase when the logistic system faces resistance.

Last week, the inventory volume in the Wuxi sample warehouse increased by 300 tons, to 426,100 tons. 200 series inventory reduced by 200 tons, to 38,900 tons; 300 series declined by 1,000 tons, to 300,400 tons; 400 series increases by 1,500 tons to 8,580 tons. 
 

200 series of stainless steel: Light transactions still consumed the inventory.

The demand is low, slowing down the consumption of the inventory, but because the arrivals from steel mills were fewer, the inventory was still reduced slightly by about 200 tons. 

Baosteel Desheng and Beigang New Materials contributed the major part to the 200 tons of new arrivals. Lately, due to the pandemic, steel mills’ delivery is influenced, but as Baosteel Desheng adopts sea freight, the half-halted logistic system did not affect it that much. The inventory is abundant. The market gets out of the shortage.
 

300 series of stainless steel: Quarantine postpones the delivery. 

The inventory of stainless steel 300 series reduced because of the lockdown during the pandemics. Steel mills could not deliver their products to the port. Delong has to cut off nearly 20,000 tons of production on 300 series due to the shortage of raw materials which couldn’t be shipped in the pandemics. Under the lockdown, the inventory reduced, because the delivery can’t make a path into the market.
 

400 series of stainless steel: Inventory increased.

In March, the output of the 400 series is expected to increase by 90,000 tons, to 556,500 tons. The inventory in Wuxi keeps rising, to 85,800 tons, increasing by 1,500 tons.

400 series inventory rose because TISCO and JISCO transport by the railway which is mostly out of the regime of the quarantine. Besides, the weak demand also results in increasing inventory.

Over the last week, the most-traded contract of stainless steel futures was boosted by the continuous limit ups of nickel, once hitting US$3,805/MT, but it also slumped to US$3,3320/MT. The fluctuation was immense. 

Stainless steel maintained the same pace as LME nickel’s surge and slump. It can be said that the stainless steel futures are being kidnapped by the LME nickel in recent times. When the LME nickel surged, stainless steel futures climbed to the highest at US$4,090/MT. When LME halted nickel trading, ShFE nickel kept hitting limit downs and stainless steel futures moved downward by 25%. Amid the great fluctuation of LME nickel, it seems that stainless steel futures loses their independence.

The trend of stainless steel futures price relies much on the LME nickel market. Nickel will be the core of the stainless steel market. There are several factors influencing nickel. First, the negotiation between Russia and Ukraine will give instant feedback on nickel. The previous negotiations have led the LME nickel to move in two directions. If the new round of negotiation fails to reach a satisfying result, the LME nickel will hype to increase again. Second, the production of nickel matte will set a tone for the market in a long term, as the electrolytic nickel supply falls short. If the output of nickel matte is not expanded, the nickel supply will still be tight. The third is about the financial situation. The Federal Reserve has officially started raising interest rates, and there will have further plans to shrink its balance sheet in the future. Tightening monetary policy will restrict further upward speculation in nickel prices.

To the buyers who are not in instant demand, we sincerely suggest that waiting until the nickel price settles down is an adoptable strategy. You can notice in recent days, the prices of stainless steel change in hours influenced by the swinging nickel price. A sharp increase usually comes with a deep down, but be noticed that in a short time, stainless steel is difficult to find a low price to go due to the increasing production cost and the production reduction, not to mention that China is now facing the severest pandemic after 2020. The raw material cost such as chromium and nickel have been high and the supply is tight. The expensive cost might trigger steel mills to reduce their production.  

In summary, in a short time, the cost will support stainless steel staying high, and the price will probably maintain above US$3,160/MT. The market sentiment is irrational, so be cautious about the sudden and exaggerating price change.
 

RAW MATERIAL|| LME Nickel hits limit ups.

NICKEL

On March 24th, Beijing time, at 4 pm, LME nickel opened to hit the limit up. The rising percentage was 14.99%, pricing at US$37,235/MT.
 

LME nickel inventory keeps reducing, to 72,900 tons. The shortage of nickel supply still wanders in the market in a short term. In a long term, with the production of nickel matte expanding, the supply of nickel will be enlarged.
 

ShFE nickel:

ShFE nickel price hit the historic new high again last week. Boosted by the LME nickel, ShFE nickel hit the limit up in two consecutive trading days, but it soon fell back significantly. The market was extremely fluctuating.

From the perspective of nickel ore, the price increased greatly. Influenced by the high nickel price, ore producers stand firm in their high price. However, the ferronickel producers are unwilling to accept such a high cost. It is predicted that the price of nickel ore will remain expensive. 

Ferronickel will continue to increase. The trading price was close to US$259/ni. It is widely believed that Tsingshan will transfer many of its production lines from producing ferronickel to producing nickel matte. It is possible that the supply of ferronickel will fall in shortage in the future.

Steel mills begin to purchase and reduce the price of high-grade ferronickel.

From March 21st to 25th, the average EXW price of high-grade ferronickel was US$268/ni, which decreased by US$2/ni, dropping down by 0.65%; as for the low-grade ferronickel (1.6%≤Ni≤1.8%), it was US$827/MT, remaining as a week ago.

Though the LME nickel increased, China’s ferronickel price continues to decline, because steel mills started to purchase and reduce the bidding price to US$259/Ni for high-grade ferronickel. This gives instruction to the ferronickel market, before which, the quotations of ferronickel were disturbed by the fluctuating nickel market. 

It is predicted that the price of high-grade ferronickel will remain and increase steadily, because the nickel spot is tight in China, as nickel price rebounds, quarantines halts the production and the inventory is declining. 
 

TRANSPORTATION|| Shanghai is in half lockdown. Ports are running.

On the night of March 27th, Shanghai is kicking off a new round of nucleic acid testing for residents on Monday morning to curb the spread of COVID-19. 



According to the announcement of the authority, Shanghai is in half lockdown.

On March 28th, Shanghai International Port Group (SIPG) said they are not going to stop. Businesses remain normal inside the port. The assistance of general manager said that the single-day container throughput remained at 140,000 TEUs. 

However, the problem is outside the port. 

On March 29th, 495 confirmed infections are reported in Shanghai, as well as 4,381 asymptomatic infections. Daily new infection numbers have climbed since the city's worst outbreak started early this month.
 
According to the authority, when they made an announcement on March 27th night, about the quarantine, “Buses, subways, ferries, taxis, and online car-hailing services will be suspended in locked-down regions. Vehicles related to epidemic control measures, emergency medical services, security, urban operation, and emergency response will be able to use roads after obtaining official approval, but the unnecessary use of other vehicles will be prohibited.”

After the quarantine levels up, relevant regulations have been set against truck drivers in Shanghai. Meanwhile, other provinces and regions are setting up stricter control on the trucks from Shanghai. Besides, considering the time waiting for nucleic acid test results, and the suspension of the containers in some storage yards, the efficiency of truck transportation will be affected.

Due to the “DYNAMIC ZERO-INFECTION” strategy that is carried in China, Shanghai will have a way to go before it is back to normal. As an important city and port, to buyers and sellers either at home or abroad, the lockdown of transport will bring huge delays in delivery.