In the first quarter, nickel prices in London showed a trend of rising first and then falling, and the domestic stainless steel market prices closely followed the trend of nickel prices. Industry-related statistics indicate that in the first quarter, China's stainless steel crude steel production was approximately 4.4 million tons, a year-on-year increase of 13.6%. The increase in production mainly came from some newly commissioned integrated capacities for nickel iron and stainless steel.
Entering the second quarter, industry-related institutions predict that the stainless steel market will enter the traditional peak demand season. It is expected that stainless steel prices will mainly fluctuate within a range, but the bottom will continue to rise and increase moderately.
In the first quarter, stainless steel prices followed nickel prices, rising first and then falling.
In the first quarter, due to the Spring Festival holiday, the convening of the Two Sessions, and the clarification of policy trends, the overall domestic market for stainless steel saw more increases than decreases. In the Wuxi market, the price of 304/2B specification 2mm cold-rolled coil peaked in mid-February, rising to 18,500 yuan/ton along with nickel prices. After that, as nickel prices fell, by the end of March, the price of this cold-rolled coil had dropped to 17,700 yuan/ton, returning to the price level before the rise in nickel prices, and was also 500 yuan/ton lower compared to the price at the end of January before the rise in nickel prices.
Faced with the persistently poor domestic and foreign market demand and the low nickel prices, Taiyuan Iron and Steel and Baosteel announced in mid-March that they would first reduce the export prices of austenitic stainless steel coils by 50 to 100 dollars per ton. Shortly after, in late March, Taiyuan Iron and Steel and Baosteel further reduced the ex-factory prices for the domestic market in April. Statistics from domestic relevant institutions show that as of early March, the total inventory in the Wuxi stainless steel market was 193,000 tons, a decrease of 13.1% compared to the same period last year. Among them, the inventory of 200 series stainless steel was 14,000 tons, accounting for 7.3%; the inventory of 300 series stainless steel was 148,000 tons, accounting for 76.7%; and the inventory of 400 series was 30,400 tons, accounting for 15.7%. The inventory in the Foshan market in early March was approximately 151,000 tons. The total inventory in the two major domestic stainless steel markets was about 344,000 tons, not including some hidden inventories in the domestic market.
New production capacity is the main source of growth in stainless steel output.
Statistics from industry-related institutions show that in 2012, China's stainless steel crude steel production was approximately 16.37 million tons, a year-on-year increase of 13.2%. Among them, 300 series stainless steel accounted for 49.6%, 200 series accounted for 31.9%, and 400 series accounted for 18.5%. According to the production plans of major domestic stainless steel mills at the beginning of 2013, it is expected that China's total stainless steel crude steel production will reach 18.6 million tons this year, a year-on-year increase of 13.6%.
According to incomplete statistics, from January to February, major stainless steel mills in China produced 2.92 million tons of stainless steel crude steel, a year-on-year increase of 14.5% (compared to 2.55 million tons in the same period last year). Among them, 300 series stainless steel accounted for 1.376 million tons, accounting for 47.1%, a decrease of 3.7 percentage points compared to the same period last year; 200 series stainless steel accounted for 924,000 tons, accounting for 31.6%, an increase of 1.8 percentage points compared to the same period last year; and 400 series stainless steel accounted for 620,000 tons, accounting for 21.3%, an increase of 1.9 percentage points compared to the same period last year. It is estimated that in the first quarter of this year, China's stainless steel crude steel production should be around 4.4 million tons, a year-on-year increase of 13.6%.
From the production situation in the first two months of this year, both Taiyuan Iron and Steel and Baosteel saw varying degrees of decline compared to the same period last year. The newly commissioned nickel iron-stainless steel integrated plants are the main source of production growth. This year, the increase in the share of 200 series stainless steel is mainly due to companies like Beihai Chengde and Yunnan Tiangao, whose products are almost entirely 200 series stainless steel. The decrease in the proportion of 300 series stainless steel is due to companies like Baosteel adjusting their product structure, increasing the proportion of 400 series and reducing the proportion of 300 series stainless steel. This year, several major steel mills in China have increased or maintained their annual production plans compared to last year, with the new production mainly coming from some steel mills that were newly commissioned last year, such as the Guangqing Company of Qingshan Group in Guangdong (1 million tons/year), Beihai Chengde Company (1 million tons/year), and Yunnan Tiangao Company of Southwest Stainless Steel (600,000 tons/year), etc.
In the first quarter, the apparent consumption of stainless steel steadily increased.
According to statistics from Chinese customs, in the first two months, China's stainless steel import and export trade situation was as follows: compared to the same period last year, the import volume was 104,000 tons, a year-on-year decrease of 19.3%; the export volume was 370,000 tons, a year-on-year increase of nearly 40%. From January to February, China imported a total of 77,000 tons of stainless steel flat products, a year-on-year decrease of 19%; exported 280,000 tons of stainless steel flat products, a year-on-year increase of 52.2%. Among the imported stainless steel products, only the import volume of hot-rolled stainless steel coils and hot-rolled stainless steel strips (width <600mm) increased compared to the same period last year, with increases of 4.7% and 18.5%, respectively. Among the exported products, the increase in hot-rolled stainless steel coils, plates, and cold-rolled stainless steel plates was significant, with year-on-year increases of 72.3%, 57%, and 41.4%, respectively. Based on the import and export volumes in the first two months, it is estimated that China's stainless steel import volume in the first quarter was approximately 150,000 tons, and the export volume was approximately 550,000 tons, with a total import and export trade volume increasing by about 7.5% year-on-year.
In addition, statistics from relevant institutions show that from January to February, China produced a total of about 2.92 million tons of stainless steel crude steel, with an apparent consumption of about 2.21 million tons, a year-on-year increase of 17%. If inventory is deducted, the actual consumption is estimated to be around 1.7 million to 1.8 million tons. Based on the apparent consumption level in the first two months, it is estimated that the apparent consumption of stainless steel in the first quarter of this year will be approximately 3.34 million tons, a year-on-year increase of 10.2%. The demand from the automotive sector is a highlight, and stainless steel prices may fluctuate and rebound in the second quarter.
In the first quarter, the sharp drop in nickel prices after a significant rise did not bring many opportunities to the stainless steel market, but instead deepened concerns about U.S. economic policies and the global market demand outlook. In April, there were no signs of easing in the European debt crisis, political turmoil reemerged in Italy, the economic crisis in Cyprus was still unresolved, and the U.S. economic outlook still faced downward risks. Against the backdrop of continued loose monetary policies in economies such as Europe, the U.S., and Japan, it is expected that there will not be much change in the European and American markets in the second quarter.
However, according to relevant institutions' forecasts, although the current debt crisis will continue to suppress market demand in Europe, it is expected that global automobile sales will increase by 3% this year. Among them, automobile sales in the North American market are expected to grow by 5%, reaching 18 million units, with sales in the U.S. expected to grow by 6%, reaching 15.3 million units. Sales in South America are expected to grow by 4%, reaching 5.6 million units, mainly driven by demand from Brazil. Sales in Asia are expected to grow by 5%, reaching 35.7 million units, with China's sales expected to grow by 10%, reaching 21 million units. Among all countries, China's demand will continue to maintain rapid growth, followed by India, Brazil, and Mexico. The increase in automobile sales will drive demand in related industries, especially for stainless steel.
According to data from the National Bureau of Statistics, from January to February, large-scale industrial enterprises achieved profits of 709.2 billion yuan, a year-on-year increase of 17.2%, continuing the recovery trend from the fourth quarter of last year and maintaining a recovery growth. It is expected that monetary policy may remain relatively loose in the second quarter, and the economy will continue to recover slowly. With the clarification of domestic policies after the Two Sessions and the downstream demand entering the traditional peak season, the demand for stainless steel will grow steadily, driving the market to warm up. However, due to the background of economic structural adjustment, the effects of policies are difficult to manifest in the short term, coupled with rising inflation expectations and the impact of recent geopolitical and other external sudden events, the prices of bulk commodities may experience increased volatility. The trend of the stainless steel market in the second quarter may oscillate within a range, with the bottom continuously rising and a mild recovery.