China: Stainless steel prices rise in Feb as futures market strengthens

• May contract on SHFE gains RMB 140/t w-o-w
• Stocks at SHFE warehouses drop 13.8% w-o-w

Mysteel Global: China’s stainless steel market gained momentum in February after a slow start to the year. According to the National Development and Reform Commission (NDRC), the rebound was driven by improvements in the futures market, which helped boost spot trading activity across most grades.

The survey assessed prices of 304-grade cold-rolled coils (CRC) in Wuxi, East China’s largest stainless steel trading hub, at RMB 13,150/tonne (t) ($1,813.7/t) in-warehouse, including VAT, up by a notable RMB 100/t from the previous week.

In Foshan, a major trading hub in the Guangdong province, prices of 304-grade stainless CRCs also climbed by RMB 100/t w-o-w, to RMB 13,200/t in-warehouse, including VAT.

The positive trend was mirrored in the futures market, where the most-traded May stainless steel contract on the Shanghai Futures Exchange (SHFE) gained RMB 140/t over the week, closing the Friday session at RMB 13,230/t.

A sharp decline in futures warrant stocks at SHFE warehouses primarily drove up prices of the same. Data from the exchange revealed that stainless steel stocks fell 13.8% w-o-w to 89,487 t as of 21 February. This reduction in stocks provided strong support to the futures market.

Meanwhile, stainless steel stocks held by traders across 89 commercial warehouses in six Chinese cities also decreased last week, after three consecutive weeks of increases. As of 20 February, total stocks stood at 1.07 mnt, reflecting a slight 0.19% decrease from the previous week.

The decline in stocks was most significant in 200-series stainless flats, as fabricators replenished their inventory following the Chinese New Year holiday. Stocks of 200-series stainless steel dropped by 2.68% w-o-w to 181,300 t.

Driven by robust demand, prices of 201/J2 CRC in Foshan reached RMB 7,250/t in-warehouse, including VAT, as of February 21, reflecting an RMB 100/t rise from the previous week.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.