- Indonesian ore tightness underpins NPI
- Ferrochrome stability lifts stainless cost floor
China’s stainless steel raw material market continues to see strong cost-side support, led by elevated nickel pig iron (NPI) and stable-to-firm ferrochrome prices. Although stainless steel wire and spot prices have corrected after a short-term surge, high raw material prices are anchoring the lower end of stainless steel pricing.
NPI prices have continued to strengthen, though the pace of gains has moderated following a sharp rally. According to market sources, high-grade NPI landing prices in China rose by around RMB 180 per nickel unit to RMB 1,075/unit during the recent uptrend, marking cumulative gains of nearly 20%. However, profit-taking and a growing wait-and-see sentiment have cooled trading activity, limiting further immediate upside.
Supply constraints in Indonesia remain the key underlying driver. Several nickel ore mines with approved quotas reportedly failed MOMS system reviews, while shipments under newly approved quotas have been delayed due to slower-than-expected ESDM clearances. This has pushed nickel ore premiums sharply higher to $28-32/wmt, tightening feedstock availability for NPI producers. Spot wholesale NPI offers are currently quoted around RMB 1,080-1,100 per nickel unit, with long-term contracts carrying premiums of RMB 10-20/unit, levels that exceed steelmakers’ preferred buying thresholds.
As the Lunar New Year approaches, stainless steel mills have become increasingly cautious, with production cuts and temporary suspensions weighing on raw material demand. With both supply and demand weakening seasonally, analysts expect NPI prices to remain supported but with limited room for further increases in the short term.
Ferrochrome and chrome ore
Ferrochrome prices remained firm throughout the month, with high-carbon ferrochrome in Qingshan holding at RMB 8,245 per 50-basis point, sustaining stainless steel production costs. Chrome ore inventories at Chinese ports declined to 3.51 million tonnes as of 30 January, reinforcing price support. South African 40-42% chrome concentrate futures were heard around $297/t, with prices expected to stay flat to strong near term.
Outlook
Stainless steel costs in China are likely to stay supported by firm NPI and ferrochrome prices, though seasonal demand weakness may cap sharp upside.
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