- Weak demand offsets production cuts across Asia
- September Chinese production expected to decline
Asian stainless steel prices continued to decline for the third consecutive week, as weak demand outweighed supply-side adjustments in China and Indonesia. Market participants said buyers across Asia remained in a wait-and-watch mode amid uncertain economic conditions and expectations of further price declines.
Although Chinese steelmakers are reportedly adjusting production in response to weaker profitability and lower orders, the supply reductions have so far failed to support prices. Demand recovery has remained slower than expected, limiting the impact of production cuts.
China: Production cuts fail to lift prices
Chinese stainless steel production is expected to decline in September from August as some mills have reduced output or adjusted production schedules amid deteriorating profitability and weaker orders.
Market estimates indicate that Chinese producers are incurring losses of around CNY 200–300/t ($30–45/t) while producing 304 stainless steel.
Despite lower production, spot buying remained weak. A trader noted that stainless steel demand, which typically improves in September compared with August, has yet to show a meaningful recovery this year.
Demand from both domestic Chinese buyers and overseas markets has also weakened recently.
Chinese export market remains subdued
The weak trend in China’s stainless steel export market continued during the week. Expectations of lower nickel pig iron (NPI) prices, which could further reduce stainless steel production costs, have made overseas buyers more cautious.
Chinese exporters have reportedly reduced some offers to secure orders, although several mills continued to maintain prices due to concerns over the strength of the yuan.
Chinese 304 cold-rolled stainless steel export prices were assessed at $2,160–2,240/t FOB, with the upper end declining by $10/t w-o-w. Meanwhile, 304 hot-rolled prices remained unchanged at $2,110–2,180/t FOB.
Indonesia: Operating rates reportedly reduced
Some Indonesian stainless steel mills have reportedly lowered operating rates amid weak domestic and export demand. Market participants also cited water supply issues affecting production processes at some mills.
However, major Indonesian producers have not officially announced production cuts, leaving the actual scale of the reduction unclear.
An exporter in Southeast Asia said that even lower production may have limited impact on prices given the weakness in demand. Offers targeting East Asian buyers reportedly declined further during the week.
Market sentiment
Market sentiment remained bearish, with weak demand emerging as the dominant price driver despite production adjustments in China and Indonesia. Expectations of lower nickel/NPI prices have also reduced buyers’ urgency to secure material.
Outlook
Asian stainless steel prices are likely to remain under pressure in the near term unless downstream demand shows a meaningful recovery. While further production adjustments in China and Indonesia could provide some supply-side support, weak buying interest and softer raw material prices are expected to remain stronger price variables.
A sustained recovery in demand, particularly in China and key Asian export markets, will be crucial for stabilising stainless steel prices.
Note: This article is published as part of a content exchange agreement between SteelDaily and BigMint.
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