China’s domestic demand for stainless steel has weakened in the past few week due to a widespread electricity shortage across the country, which weighed on prices in the week to Wednesday October 13.
Stainless steel cold-rolled coil 2mm grade 304 domestic (Wuxi): ۲۱,۰۰۰-۲۱,۲۰۰ ($۳,۲۶۰-۳,۲۹۱) per tonne, narrowed downward by 200 yuan per tonne from September 29.
The power shortage has resulted in downstream factories lowering their production rates, which in turn reduced their demand for stainless steel, market sources said.
Although the Ministry of Industry & Information Technology said on September 29 that it would make every effort to increase power supply for the upcoming autumn and winter months, major stainless steel-consuming such as Jiangsu and Guangdong have yet to experience much improvement.
“The power shortage is a hard problem to solve in a short period of time, so downstream factories will keep their stainless steel procurement low,” a trader in Wuxi said.
But the trader does not expect prices to continue to drop either because stainless steel producers’ production rates are also very low.
An industry analyst said that major mills plan to produce 2.2-2.3 million tonnes of stainless flat steel in October, much lower than the 2.7 million tonnes typically seen in each month before August.
Stainless steel cold-rolled coil 2mm grade 304 export: $۳,۴۸۰-۳,۶۴۰ per tonne fob China, up by $30-100 per tonne
Stainless hot-rolled coil grade 304 export: $۳,۳۴۰-۳,۳۷۰ per tonne fob China, up by $50 per tonne
In contrast with the domestic market, export offers for Chinese stainless steel increased over the past week.
A mill in northern China offered stainless CRC at $3,640 per tonne fob. Most other mills offered cargoes at $3,480-3,510 per tonne fob.
Stainless HRC was offered at $3,340-3,370 per tonne fob.
Concerns over steel mills’ lower production rates and an appreciation of the yuan against the dollar pushed up offers.
The exchange rate was 6.44 yuan to $1 on October 14, against 6.49 yuan to $1 on September 30, according to China’s State Administration of Foreign Exchange.
Buyers considered the offers high and did not submit any bids during the week, sources said.
Stainless steel cold-rolled coil 2mm grade 304 import: $۳,۴۰۰-۳,۴۵۰ per tonne cif East Asia, narrowed by $30-60 per tonne from $3,340-3,480 per tonne cif
Stainless steel hot-rolled coil grade 304 import: $۳,۰۰۰-۳,۰۳۰ per tonne cif East Asia, up by $40-50 per tonne
Tsingshan Holdings’ Indonesian mill did not issue offers for stainless CRC over the week. Market participants said that this was because the mill’s order books for the fourth quarter were full.
Taiwanese exporters offered stainless CRC at during the week $3,370 per tonne fob, which is equivalent to about $3,400-3,420 per tonne cif East Asia.
Transactions involving Chinese products were expected by market participants to be concluded at prices as low as $3,450 per tonne cif if there were any orders.
Indonesian stainless HRC was offered at 3,000-3,030 per tonne cif during the week amid stiff competition from other suppliers in the region.
Offers from mainland China were at $3,370-3,400 per tonne cif and while those from Taiwan were at $3,150-3,170 per tonne cif.
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