Market News
Shanghai stainless steel struggles below 15,000 yuan on supply, demand worries
MANILA, Nov 6 (Reuters) - Shanghai stainless steel futures edged lower in early trade on Wednesday, struggling below the 15,000 yuan per tonne level, as concerns persisted over high inventory and weak demand in top producer China.
The front-month February 2020 stainless steel contract on the Shanghai Futures Exchange slipped as much as 0.4% to 14,865 yuan ($2,125.00) a tonne.
The benchmark contract had closed below 15,000 yuan in the last three sessions and was last down 4.6% from its base price of 15,585 yuan set when it began trading on Sept. 25.
“Stainless steel inventory in China continued to hover at record-high level,” said Helen Lau, a metals and mining analyst at Argonaut Securities.
With plentiful supply and weak demand, she said many stainless steel producers were making losses, except those with integrated nickel pig iron (NPI) plants.
Chinese stainless steel producers mainly use NPI, a low-grade ferronickel and cheaper alternative to pure nickel, as feedstock.
“Further weakness in stainless steel prices will lead to more producers halting production,” Lau said. “Reduced stainless steel production and price consolidations are headwinds for nickel prices.”
In contrast, the rest of China’s ferrous metals complex rose, with Shanghai construction steel rebar jumping 1.9%, extending this week’s gains as China’s policymakers have ratcheted up support for the slowing economy.