1. Negative profit transmission in the industrial chain, and large-scale production cuts in upstream iron factories

There are two main raw materials for stainless steel, namely ferronickel and ferrochrome. In terms of ferronickel, due to the loss of profits in stainless steel production, the profits of the entire stainless steel industry chain have been squeezed, and the demand for ferronickel has declined. In addition, there is a large return flow of ferronickel from Indonesia to China, and the domestic circulation of ferronickel resources is relatively loose. At the same time, the domestic ferronickel production line is losing money, and most iron factories have increased their efforts to reduce production. In mid-April, with the recovery of the stainless steel market, the price of ferronickel reversed, and the mainstream transaction price of ferronickel has risen to 1080 yuan/nickel, an increase of 4.63%.

In terms of ferrochrome, Tsingshan Group’s bidding price for high-carbon ferrochrome in April was 8,795 yuan/50 basis tons, a drop of 600 yuan from the previous month. Affected by the lower-than-expected steel bids, the overall chromium market is pessimistic, and retail quotations in the market have followed the steel bids down. The main production areas in the north still have meager profits, while the electricity costs in the south production areas are relatively high, coupled with high ore prices, production profits have entered a loss, and factories have shut down or reduced production on a large scale. In April, the constant demand for ferrochrome from stainless steel factories is still there. It is expected that the steel recruitment will be flat in May, and the retail price in Inner Mongolia has stabilized at around 8,500 yuan/50 basis tons.

Since the prices of ferronickel and ferrochrome have stopped falling, the comprehensive cost support of stainless steel has been strengthened, the profits of steel mills have been restored due to the rise in current prices, and the profits of the industrial chain have turned positive. Market expectations are currently optimistic.

2. The high inventory status of stainless steel continues, and the contradiction between weak demand and wide supply is still there

As of April 13, 2023, the total social inventory of stainless steel 78 warehouse caliber in mainstream markets across the country was 1.1856 million tons, a week-on-week decrease of 4.79%. Among them, the total inventory of cold-rolled stainless steel was 664,300 tons, a week-on-week decrease of 5.05%, and the total inventory of hot-rolled stainless steel was 521,300 tons, a week-on-week decrease of 4.46%. The total social inventory has declined for four consecutive weeks, and the decline in inventory expanded on April 13. The anticipation of stock removal has improved, and the sentiment of spot price increases has gradually risen. With the end of the phased inventory replenishment, the decline in inventory may be narrowed, and the inventory may even be re-accumulated.

Compared with the historical level of the same period, the social dominant inventory is still at a relatively high level. We believe that the current inventory level still suppresses the spot price, and under the pattern of loose supply and relatively weak demand, the downstream has always maintained the rhythm of rigid demand transactions, and the demand has not Explosive growth occurred.

3. Macro data released in the first quarter exceeded expectations, and policy signals fueled market optimism

The GDP growth rate in the first quarter was 4.5%, exceeding the expected 4.1%-4.3%. On April 18, Fu Linghui, spokesperson of the National Bureau of Statistics, said at a press conference that since the beginning of this year, the overall Chinese economy has shown a recovery trend. , the main indicators have stabilized and rebounded, the vitality of business entities has increased, and market expectations have improved significantly, laying a good foundation for the realization of the expected development goals for the whole year. And if the influence of the base is not taken into account, the overall annual economic growth is expected to show a gradual recovery trend. On April 19, Meng Wei, spokesperson of the National Development and Reform Commission, introduced at a press conference that the next step is to implement comprehensive policies to release the potential of domestic demand, promote the continuous recovery of consumption, and release the potential of service consumption. At the same time, it will effectively stimulate the vitality of private investment and give full play to government investment. guiding role. The economy stabilized and picked up in the first quarter, superimposed on the goal orientation of the country to promote consumption and investment, and policy signals will actively guide commodity expectations.