China's 304 stainless prices ease further, destocking persists

On April 16, Mysteel assessed the in-warehouse price of 304-grade cold-rolled coil (CRC) in Wuxi, East China, at Yuan 13,200/tonne ($1,805.7/t) including VAT, down by Yuan 150/t on week. 

Stainless hot-rolled coil (HRC) of the same grade in Wuxi also saw a weekly price decrease of Yuan 150/t, settling at Yuan 12,700/t on Wednesday, according to Mysteel's data. 

In contrast, the futures market showed signs of stabilization after the recent sharp declines. The most-traded June stainless steel contract on the Shanghai Futures Exchange (SHFE) gained Yuan 95/t on week to close the daytime session on April 16 at Yuan 12,820/t. 

The rebound was largely seen as a technical correction after last week's plunge, which was driven by broad pessimism across global derivatives markets, according to market sources. 

Meanwhile, SHFE warrant stocks finally saw a notable drop, falling by 7.4% on week to 185,152 tonnes as of Wednesday. Similarly, inventories of austenitic stainless CRC at the 89 warehouses across six major cities surveyed by Mysteel declined by 3% on week to 476,336 tonnes. 

However, concerns are rising over the large volume of SHFE stainless steel warrants due to expire in May. Of particular note, some 24,429 tonnes of standard warrants under the May contract – originally registered a year ago – are set to expire by May 15. 

These will either need to be sold downstream or delivered into spot warehouses, adding pressure to spot inventories in the coming weeks, a market insider warned. 

In comparison, standard warrants expiring in April and June stand at just 2,053 tonnes and 6,036 tonnes respectively, according to SHFE data.

Source:Mysteel Global