Recently, affected by multiple factors such as fluctuations in raw material prices, weak downstream demand and export policy adjustments, China's stainless steel market has shown a pattern of “weak domestic demand and strong exports”. Although the industry is facing cost pressure, but the head enterprises through technological upgrading and overseas layout, still maintain strong competitiveness.

1. Raw material prices are high and oscillating, and the profit of steel mills is under pressure.

Nickel and chromium, as the key raw materials for stainless steel production, have experienced significant price fluctuations recently. London Metal Exchange (LME) data show that in May the nickel price remained at about $21,000 / ton, up about 8% over the beginning of the year; South African chrome ore due to power supply problems resulting in export restrictions, driving the domestic price of high-carbon ferrochrome climbed to 9400 yuan / ton (including tax), up 5% over April.

Affected by this, the domestic 304 cold rolled stainless steel production costs continue to go up, the mainstream steel mills ex-factory price maintained at 14500-14800 yuan / ton ** range, but the downstream acceptance is limited, the market turnover to just demand. Some small and medium-sized steel mills chose to reduce production due to profit compression, and the industry's work rate dropped about 3 percentage points compared with the previous month.

2. Weak domestic demand Construction and home appliance industry dragged down consumption

Domestic stainless steel consumption mainstay - real estate and home appliance industry demand continues to be sluggish. National Bureau of Statistics data show that from January to April real estate development investment fell 9.8% year-on-year, home appliance production declined by 3.5% year-on-year, resulting in 200-series and 400-series stainless steel inventory backlog. Wuxi Stainless Steel Exchange monitoring shows that the social inventory increased by 12% compared with the beginning of the year, traders generally take a “low inventory, fast turnover” strategy to avoid risk. 

3. Export performance is bright Southeast Asia, the Middle East into a major growth point

Despite the complexity of the global trade environment, China's stainless steel exports are still growing. General Administration of Customs data show that from January to April 2024, China's stainless steel exports totaled 1.56 million tons, an increase of 15% year-on-year, of which Indonesia, Vietnam, Turkey and other markets contribute to a significant increment.

- Indonesia: Increased imports of hot rolled coils from China due to insufficient local stainless steel capacity;

- Middle East: affected by the Red Sea shipping crisis, some European orders turned to China for procurement;

- India: China's stainless steel anti-dumping policy tightened, but high-end products are still competitive.

4. Policies and industry dynamics: accelerated green transformation

Driven by the “double carbon” goal, the head of enterprises to accelerate the layout of low-carbon technology:

- TISCO Stainless: Announced to invest 2 billion yuan to build a hydrogen metallurgy demonstration project, which is expected to be put into production in 2025;

- Castle Peak Group: added 500,000 tons of cold rolling capacity in Indonesia Industrial Park to further optimize overseas supply chain;

- Baowu Group: signed a long-term supply agreement of high-strength stainless steel with European car companies, expanding high-end application scenarios.

Market Outlook

Industry analysts believe that in the short term, the stainless steel market will still be constrained by high costs and demand differentiation, but export resilience and high-end transformation is expected to support the long-term development of the industry. CITIC Capital metal industry analysts pointed out that: “If the second half of the infrastructure investment code or real estate policy relaxation, domestic demand or ushered in a marginal improvement, but exports are still the key growth engine of the stainless steel industry this year.”