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MYSTEEL: China stainless stocks slip fast on rising sales

China’s stocks of stainless steel slipped at a faster pace over the March 28-April 3 week thanks to an improvement in sales during that period, with the total inventories held by traders in Wuxi and Foshan reaching 630,750 tonnes as of April 3, down 8.4% week on week, Mysteel’s latest weekly survey showed. The rate of decline was faster than the 3.2% fall witnessed during the prior week.

Within the total, stainless stocks held by traders in Wuxi, a key stainless trading hub in East China’s Jiangsu province, declined by 9.1% on week to 359,245 tonnes as of April 3. During the same period, stocks in Foshan, the other stainless trading hub in South China’s Guangdong province, slipped to 271,500 tonnes, down another 7.4% from one week before, according to the survey.

The digestion of stainless inventories held by traders accelerated mainly because “many downstream buyers returned to the market to replenish their stocks when they found that the price had slid to a very low level,” a market watcher in Wuxi told Mysteel Global.

But at the same time, domestic stainless traders slowed their pace of buying from the stainless mills as well, choosing instead to draw down their stocks on hand first to boost cashflow, the Wuxi-based market source explained, adding that some stainless suppliers even discounted their selling prices to drive sales.

Domestic stainless prices dropped further over the past week, with the price of 304/2B 2mm stainless cold rolled coil in Wuxi registering Yuan 12,950/tonne ($1,829/t) in-warehouse and including the 13% VAT as of April 3, a new low after the price had hit Yuan 12,600/t on June 16 2017, according to Mysteel’s database. The price was also down another Yuan 200/t on week.

The continuous softening of stainless prices indicates that China’s stainless market remains under pressure. Stainless stocks held by traders are still high, and demand in overseas markets has yet to see any signs of improvement amid the ongoing spread of COVID-19, Mysteel Global learned.

“Many Chinese (stainless) exporters admit that their export business has shrunk as a result of the COVID-19 crisis, and some domestic stainless producers have had to consider reducing their production if the epidemic cannot be well controlled in the coming term,” the market source said.

Written by Nancy Zheng, zhengmm@mysteel.com

Edited by Russ McCulloch, russ.mcculloch@mysteel.com

Stainless Stocks in Wuxi and Foshan  (Unit: tonne)

Warehouse

CRC

WoW(%)

HRC

WoW(%)

Total

WoW(%)

Wuxi

194,442

-9.41%

164,803

-8.8%

359,245

-9.13%

Foshan

108,528

-5.36%

162,972

-8.69%

271,500

-7.39%

Note: The data include 200-series, 300-series, and 400-series with the traders.