- Chinese mills cautious despite rapidly rising feedstock prices
- Stainless steel price downside protected by higher inputs
SteelDaily: China’s stainless steel raw-material market moved sharply higher in early January as tightening nickel ore availability and rising nickel pig iron (NPI) costs lifted production economics. Uncertainty surrounding Indonesia’s 2026 mining quotas, alongside discussions on cobalt taxation and broader geopolitical risks, has triggered strong bullish sentiment across the non-ferrous complex, even as physical buying activity remains restrained.
Nickel ore supply tightened further as Indonesia raised its January 2026 benchmark price while heavy rainfall disrupted Philippine shipments, lowering ore availability into China. Market participants increasingly expect Indonesia to significantly reduce nickel mining and export quotas next year, reinforcing concerns of structural supply tightening.
NPI prices rose rapidly, with suppliers quoting RMB 960-970 ($137-139) per nickel unit (tax included), reflecting rising ore costs and stronger futures sentiment. However, stainless steel mills remain cautious, as the sharp increase in feedstock costs has begun to strain margins. According to MySteel, China’s NPI ex-factory index climbed from RMB 891.7 ($127) per nickel unit on 23 December to RMB 965 ($138) by 8 January, while SHFE nickel prices hit fresh year-to-date highs.
Rising raw-material costs are feeding directly into stainless steel production economics. The cost of producing 304-grade cold-rolled coil increased from RMB 12,571/t ($1,802/) in early December to RMB 13,356/t (416,251/t) by 7 January, strengthening downside protection for 300-series stainless steel prices despite sluggish downstream demand.
In the ferrochrome market, prices remain broadly supported by tight spot supply. Although January long-term contract prices eased marginally, limited availability in the spot market continues to provide cost support. With China’s stainless steel output expected to rise month-on-month in January, ferrochrome demand is also likely to improve modestly, keeping the market balanced in the near term.
Overall, China’s stainless steel raw-material complex is now driven more by supply-side risk than demand recovery. While transactions remain cautious, elevated nickel and alloy costs are reinforcing a strong floor under stainless steel prices, limiting the scope for any sharp downside in the short term.
Note: This article has been written in accordance with a content exchange agreement between SteelDaily and BigMint.
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