China’s stainless steel production was recorded at 2.76 million tonnes (mnt) in June 2022, a fall of 9% as against 3.03 mnt in May 2022, as per data maintained by SteelMint. On a y-o-y basis the production volume was down 3.83% as against 2.87 mnt in June 2021, as per SteelMint data.
Nickel future on the Shanghai Futures Exchange (SHFE) declined by 7.85% to RMB 191,776/tonne (t) m-o-m in June 2022 as against RMB 208,122/t in the previous month.
Series-wise stainless steel production
The 300 series production volume stood at 1.34 mnt, registering a fall of 6.29% in June as against 1.43 mnt in May 2022. On a yearly basis, production of the 300 series fell by 12% as against 1.53 mnt in June 2021.
The 400 series production volume was recorded at 0.51 mnt, a decline of 14% vis-a-vis 0.59 mnt in the last month. However, on a y-o-y basis, production of the most widely used 400 series has shown a rise of 2% as against 0.50 mnt in June 2021.
The 200 series production volume was at 0.91 mnt in June 2022, witnessing a fall of 9.90% m-o-m as compared to 1.01 mnt in the previous month. On the other hand, the y-o-y volume has shown an uptick of 8.33% as against 0.84 mnt in June 2021, as tracked by SteelMint.
Global production in Q1 2022
Global stainless steel meltshop production decreased by 3.8% y-o-y to 14.45 mnt in Q1 2022 as against 15.02 mnt in the year-ago period, as per data released by the World Stainless Steel Association. China was the largest producer of stainless steel at 8 mnt during the period, although its production decreased 8% y-o-y.
Current exchange scenario
Notably, as the entire base metals market sloped downward, nickel prices followed suit, falling to over 6-months lows at $19,402/t at yesterday’s closing, down sharply by $5,857/t m-o-m. Moreover, the volumes remained lower than pre-LME shutdown levels, which will continue to foster slow price movement.
Outlook
The current slower demand for stainless steel across global markets has raised concern over nickel demand. This can be offset by rapidly increasing offtake from the electric vehicle (EV) battery sector.
It is understood that some steel mills are likely to further cut production in the upcoming months due to falling prices and weak demand.
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