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Stainless steel market and industry present characteristics
Since August, China's major stainless steel markets have experienced a round of price increases. Currently, the global inventory levels remain relatively low. With steel mills in Europe and the U.S. resuming operations after their summer breaks, downstream users may start rebuilding their inventories in September, which could further push prices upward. However, industry insiders note that while global stainless steel prices have rebounded due to rising nickel prices and improved economic data in the West, the fundamental market conditions have not significantly improved. As a result, uncertainty about future market trends remains high.
In recent months, the stainless steel market has shown several notable characteristics. Since the beginning of this year, domestic stainless steel prices have been declining, primarily due to falling nickel prices and weak demand. In early July, the price of 304/2B and 2mm cold-rolled coil in Wuxi dropped to 14,900 yuan per ton as nickel prices continued to fall. By the end of the month, prices rebounded to 15,400 yuan per ton as nickel prices recovered, but this was still 3,100 yuan lower than the peak of 18,500 yuan per ton at the start of the year. Since August, prices in the Wuxi market have started to rise again, with current mainstream prices reaching 16,300 yuan per ton.
The upward trend in Lon Nickel prices has shifted the market sentiment from decline to optimism. Market participants are now more hopeful about the outlook. At the same time, demand has shown signs of improvement, with steel mills reporting increased orders. As a result, Baosteel maintained its July prices for austenitic stainless steel coils in the domestic market for August. The price of 304 hot-rolled coils is 14,500 yuan per ton, 304/2B (2mm cold rolled) is 15,500 yuan per ton, and 430 (2mm cold rolled) is 9,600 yuan per ton.
In the first half of the year, China’s crude steel production reached approximately 9.19 million tons, representing a 17.4% year-on-year increase. Among this, 300-series stainless steel output was around 4.256 million tons, up 8.5% year-on-year, accounting for 46.3% of total output. 200-series output was about 3.09 million tons, an increase of 30.9%, and 400-series output was approximately 1.84 million tons, up 19.7%. Due to the drop in nickel prices, many steel mills reduced their 300-series production to manage risk, while 200-series output rose sharply due to production from integrated plants.
Despite the weak market conditions, the combined output of five major steel mills—TISCO Stainless, Baosteel Stainless, Jiugang, Zhangjiagang Posco (Zhangpu), and Lianzhong—reached 4.04 million tons, accounting for 44% of domestic stainless steel production. Qingshan Group alone contributed about 11% of national output, while Jinguang Group (Southwest Stainless and Yunnan Tiangao) accounted for roughly 5.3%. In the first half of the year, overall crude stainless steel output remained nearly flat compared to the same period last year, with a slight increase of 0.43%. Baosteel Stainless saw a small decline of 2.3%, while Zhangpu grew by nearly 5%. Jiugang experienced a 9.5% drop due to maintenance in May. The main drivers of growth were Qingshan Group (up 18.7%), Jinguang Group (up 42%), Beihai Chengde, and Huale Alloys.
However, despite oversupply concerns, new projects continue to be launched. Recently, Beihai Chengde ordered a 600,000-ton-per-year cold rolling line from Siemens Metals Technology. This facility will produce both 200- and 300-series cold-rolled strips and is expected to begin operations in 2014. After full operation, the company plans to expand into stainless steel broadband production. The equipment can also process hot-rolled annealed pickled stainless steel, reducing thickness from 1–5 mm to 0.3–3 mm with widths ranging from 800–1300 mm. Currently, Beihai Chengde mainly produces nickel ore and narrow stainless steel strips, but it aims to reach 1.6 million tons of stainless steel output by 2014. With full expansion in 2015, annual production capacity is expected to reach 4 million tons.
In the first half of the year, China's apparent consumption of stainless steel reached 6.855 million tons, up 14% year-on-year. As of June 30, Wuxi's stainless steel inventory stood at approximately 193,000 tons, up 3.2% from the previous month and 2.7% year-on-year. Of this, 200-series inventory was 9,309 tons (5%), 300-series was 154,600 tons (80%), and 400-series was 29,300 tons (15%). In Foshan, inventory was around 129,000 tons, down 2.3% from the previous month. Including other stocks held by steel mills, actual consumption in the first half of the year is estimated to be about 6 million tons.
By early July, Wuxi's total stainless steel inventory was 181,000 tons, down 6.3% from the previous month. By the end of July, the total had dropped to 180,000 tons, a 6.6% decrease from the prior month.
In the first half of the year, China imported 344,700 tons of various stainless steel products, a 13.2% year-on-year decrease. Exports reached 1,297,000 tons, up 25.3%, resulting in a net export of 950,000 tons, up 49.4%. As in previous years, only cold-rolled stainless steel belts were still net imports, while all other types were net exports. Hot-rolled stainless steel coils and cold-rolled stainless steel plates (width > 600mm) were the two main categories in China's import and export trade. Hot-rolled coils accounted for 19% of total imports and 37.8% of total exports, while cold-rolled plates made up 37.2% of imports and 30.8% of exports.
Despite these positive export figures, the second half of the year faces challenges due to weak external demand, rising export costs, and frequent trade disputes. Additionally, the global oversupply situation continues to intensify competition in the market.