In recent days, the price of China’s stainless steel market has continued to rise. The price of 201J1 stainless steel cold rolled coil has reached 1329.87 usd/ton; many distributors have released news on the market to increase prices.
On the surface, the main reason for this price increase
The first is because of the rise in the London Nickel Futures Index and the rise in nickel, a raw material for stainless steel.
Second, the influence of supply and demand. China’s New Year holiday is approaching, a large number of downstream stainless steel factories such as the home appliance industry have begun to increase production capacity, and the market demand is strong.
Third, it is affected by the environmental protection policy of the Chinese government. This led to a reduction in the production of stainless steel raw material ferrochrome (this has been written in the author’s previous article), and the main steel plants reduced production. In December, the production of 400 series stainless steel decreased by 7.9% compared with the previous month.
Fourth, major traders have overstocked inventory and pushed up prices.
However, I predict that China’s stainless steel market prices will start to drop from February 5th to February 10th. And will continue to cut prices after the Chinese New Year.
The main reasons are as follows:
1. This Monday, the price of stainless steel futures fell to the limit. At that time, the author said that the price of stainless steel is about to reverse.
2. The Chinese steel giant-TSINGSHAN, since December 24, 2020, the total stainless steel futures warehouse receipts have reached 45,486 tons. From the perspective of open interest, the stainless steel futures 2101 contract has 8220 hands and the delivery demand is 41100 tons. The current registered warehouse receipts have exceeded the number of open positions. That is to say, the current warehouse receipts have fully satisfied the 2101 contract delivery, so there is no such thing. “Market Corner”.
3. Other Chinese steel giants are also actively completing the 2102 contract delivery resource warehouse receipt registration, mainly due to the Chinese New Year holiday, the last trading day and delivery date of the 2102 contract have been advanced, and the last trading day of the 2102 contract has been advanced to February 5, 8 -10 The delivery will take place in three days.
4. According to past experience, after the Chinese New Year, market demand will decrease and traders will reduce inventory.
5.The current price of stainless steel coils has exceeded the affordable price of downstream factories. After these factories complete orders for the Spring Festival, they will definitely reduce demand and force stainless steel prices to fall.
Therefore, the author predicts that after a short-term crazy increase in the price of stainless steel in China, the price will start to be reduced on February 10, and the substantial price reduction will come after the end of the Chinese New Year holiday.