China's crude stainless steel production rebounded significantly in March from February as mills resumed normal operations following the Chinese New Year holiday, Mysteel's latest survey results show. This month will likely see a reversal, however, with output tipped to rise by less than 1%.
Total crude stainless output from the 43 Chinese mills under Mysteel's regular tracking stood at about 3.8 million tonnes in March, soaring by 1.09 million tonnes or 40.1% from February, and up 8.1% year-on-year.
The sharp on-month increase was largely attributed to the post-CNY resumption of production, Mysteel Global notes, as February's output was depressed by extensive maintenance shutdowns and mill closures during the holiday period. According to a Wuxi-based industry insider, multiple mills that halted production in February resumed normal operations last month.
By grade, output of 200-series stainless reached some 1.17 million tonnes last month, up 43.1% from February and by 21.4% from March last year, the survey results show. Production of 300-series – the most widely used series – reached 1.94 million tonnes, surging 46.8% from February and rising 1.9% from a year ago. Output of 400-series totaled 687,900 tonnes, increasing 20.2% month-on-month and 6.9% year-on-year.
The surge in production has translated into significant rises in inventory levels in both mill yards and commercial warehouses, Mysteel Global understands.
Mysteel's survey of 15 major domestic stainless steel mills showed that by the end of last month, their stocks of finished stainless had reached about 1.04 million tonnes, up 19.3% month-on-month and 26% year-on-year.
With mills maintaining steady deliveries to the market, inventories at domestic commercial warehouses have also climbed, reflecting the ongoing supply-demand imbalance. Mysteel's survey of 89 warehouses regularly monitored across six major Chinese cities showed that as of April 2, their total stainless stocks stood at approximately 1.18 million tonnes, marking an on-month rise of 33,565 tonnes or around 2.9%.
Looking ahead, Mysteel's survey suggests a modest pullback in crude stainless production this month. Total output at the surveyed mills is scheduled to reach 3.77 million tonnes which, if achieved, would be lower by just 0.7% from March but still 7.7% higher than a year ago.
By series, April production is expected to edge lower for both the 200- and 400-series, while output of the 300-series is set to climb slightly.
Specifically, 200-series output is projected at 1.14 million tonnes, down 3% month-on-month, though this would still represent a 12.2% year-on-year increase if realized. Production of 300-series is forecast at 1.96 million tonnes, up 1.1% month-on-month and 7.4% year-on-year, while 400-series output is expected at 677,300 tonnes, down 1.5% month-on-month but still up 1.7% from the year-earlier level, if materialized.
The combination of high crude stainless production and mounting inventories suggests continued pressure on stainless steel prices in the near term, Mysteel Global notes. On April 7, Mysteel assessed the price of 304-grade stainless cold-rolled coil in Wuxi, East China's key stainless trading hub, at Yuan 14,400/tonne ($2,100/t) in-warehouse and including tax, lower by Yuan 50/t from a month ago, reflecting the bearish sentiment.
Source:Mysteel Global
