China: 31 Stainless Steel Mills Close for Maintenance

In order to fully promote the “regional approval suspension – a policy that allows local authority to suspend approval of new projects if there is any incident of firms violating environmental norms in the region”, Environmental Protection Bureau of Jiangsu Dainan Town on October 20 carried out inspection and shutdown 31 stainless steel rolling mills in the town.

Yesterday, TISCO Group lowered its HC Ferro Chrome purchase price for November delivery by RMB 100 to RMB 6,750/MT (USD 972) 50 basis per ton, Hengyang Valin Steel Pipe also announced its tender price at RMB 8,588/MT (USD 1237) 55 basis per ton, down by RMB 192/MT for a purchase quantity of 150 MT. Recently, prices of basic raw material such as Chrome Ore, coke, power, and logistics, have increased, therefore, pulling up the overall production cost of Ferro Chrome. Though market participants reflecting mixed sentiment as some were expecting the Ferro Chrome prices to rise while other anticipated a rollover, but a downward correction in the same has been surprising to the industry.

Some of the participants that were optimistic regarding the tender prices revealed that with the rise in Chrome ore prices, the steel mills have a high chance of accepting higher offers. However, with the same not getting accepted, there is confusion in the market.

On October 23, the alloy index of HC ferrochrome 50 basis price: RMB 7,184 (USD 1035) in Hebei; RMB 7,294 (USD 1050) in Shandong;RMB 7,513 (USD 1082) in Liaoning; RMB 7,401 (USD 1066) in Jiangsu; RMB 7,406 (USD 1067) in Sichuan; RMB 7,480 (USD 1077) in Hunan area ; LC ferrochrome 60 basis(delivered, including tax): RMB 12,885 (USD 1855) in Hebei Province ; RMB 12,993 (USD 1871) in Shandong area ; RMB 13,103 (USD 1887) in Liaoning area ; RMB 13,161 (USD 1895) in Jiangsu area; RMB 13,164 (USD 1896) in Sichuan area .

Chrome Ore Declined

Affected by the downward price adjustment of a new round of tenders by the iconic steel companies, coupled with the moderate market demand, chrome ore prices at ports have declined.

Stainless Steel Continues to be Flat

304 products in Wuxi market witnessed unchanged offered. Considering private companies such as Chengde and Hongwang, the raw edge cold rolled coils had an RMB50-100/MT reduction, to report at RMB15,300-15,350/MT (USD 2205-2210), hot rolled coils had also undergone a partial adjustment process, although the mainstream price of Dongte is still at RMB14,700-14,750/MT (USD 2117-2124), the current offers by Tsingshan are already at RMB14,600-14,700/MT (USD 2102-2117).

In October, the output of 300 series stainless flat crude steel of major steel mills continued to increase substantially. The stocks with traders started increasing gradually. The downstream demand was overall weak and formed considerable pressure against price. Especially, after the peak season of September and October, the market pressure may be further increased.

Future Outlook

After the settlement of tender price by Tisco Group, the mainstream market sentiment in November may have been finalized. However, according to past practice, the tender price of other iconic steel mills such as Tsingshan Group and Jiu Steel is likely to be around RMB7,000/MT (USD 1008) 50 basis per ton.

Additionally, before other steel mills finalized the tender price of HC ferrochrome for November, the industry may continue to be in a wait and watch mode, and significant fluctuation in alloy price is unlikely to happen.