- Profits rise as 304 SS CRC tags climb up by RMB 550/t
- Warmer weather, rising end-user demand boost trades
Mysteel: China’s crude stainless steel production reached a record high in March, totalling 3.51 mnt, marking an 11.6% increase from February and an 11.25% rise compared to March 2024.
The sharpest gain was seen in austenitic stainless steel production, which rose by 247,500 t (14.96%) to 1.901 mnt. However, in April, production is expected to remain relatively stable, with a slight 0.1% decline forecasted, bringing the total to 1.899 mnt.
This strong production growth was primarily driven by improved profit margins among domestic stainless steel producers, fuelled by favourable market conditions last month.
On 31 March, prices of 304-grade stainless cold-rolled coils (CRCs) in East China touched RMB 13,700/t ($1,863.7/t), an increase of RMB 550/t ($75/t) from February-end.
This price surge significantly boosted mill margins, with profits from producing standard 304-grade CRCs peaking at 1.12% on 12 March, the highest in over a month.
In addition to higher prices, warmer weather and recovering end-user demand led to destocking at both mills and trading warehouses, further encouraging production, according to market sources.
By the end of March, stainless steel inventories at 15 domestic mills had decreased by 16.5% from February, totalling 821,500 t. Meanwhile, total inventories at 89 commercial warehouses across six key cities dropped by 2.5% m-o-m to 1.1 mnt.
The trend was also observed overseas, as major Indonesian stainless steelmakers, backed by Chinese investors such as Tsingshan Holding Group and Xiamen Xiangyu Group, increased production. Their combined output of austenitic crude stainless steel reached 460,000 t in March, a 9.5% rise from February. However, production in April is expected to decrease by 6.7% m-o-m to 420,000 t.
Still, many market insiders remain cautious about the profit outlook for April, given surging production costs, especially for key raw materials such as nickel pig iron (NPI) and high-carbon ferro chrome (FeCr), both essential for austenitic stainless steel.
Notably, two stainless giants – Tsingshan Group and Taiyuan Iron and Steel Corporation – increased their April bidding prices for high-carbon ferro chrome by RMB 600/t ($82/t) m-o-m to RMB 7,595/t ($1,040/t) and RMB 7,395/t ($1,008/t) for 50Cr, respectively.
Meanwhile, the bullish price momentum has stalled due to rising global trade tensions and increasing market risk aversion, sources cautioned.
Note: This article has been written in accordance with a content exchange agreement between Mysteel and BigMint.
Leave a Reply