Chinese stainless steel market hard to improve in 2020
----Interview with Shulong Bi
General Manager
Wuxi Dream Stainless Steel Co., Ltd.
- Located in Wuxi, Jiangsu province, Wuxi Dream Stainless Steel Co., Ltd. was founded in 2018. The company mainly deals with 2205 duplex stainless steel, 310S and 309S grade cold and hot-rolled stainless steel.
- Asian Metal: Mr. Bi, thank you for taking the interview. Please introduce your company briefly.
- Mr. Bi: Located in the South Stainless Steel Market of Wuxi, Wuxi Dream Stainless Steel Co., Ltd. was established in March of 2018. At present, our main products are 2205 duplex stainless steel, 310S and 309S grade cold and hot-rolled stainless steel, with a monthly trading volume of about 1,000t. The company’s supply is stable and sufficient, and the standing stock is more than 1,000t.
- Asian Metal: Which steel mills do you cooperate with and what are the ordering channels?
- Mr. Bi: Our company sells stainless steel products from Taigang Stainless, Eastern Special Steel, LISCO, ZPSS and Tsingshan Stainless all the year round. The ordering channel is stable, and it can also act as an agent for customers who need special steel and specifications. In order to meet the diversified processing needs of customers, our company has built a good relationship with a number of processing plants, which can provide customers with services such as embossing, mirror polishing, plate polishing, sanding, leveling, slitting, cutting (laser and water knife), zero separation, etc.
- Asian Metal: What industries are your stainless steel products mainly used in?
- Mr. Bi: 2205 Duplex Stainless Steel Standard No.: ASTM A240/A240M-01 duplex stainless steel 2205 alloy is a duplex stainless steel composed of 22% chromium, 2.5% molybdenum and 4.5% nickel nitrogen alloy. It has high strength, good impact toughness and good overall and local stress corrosion resistance. Its products are widely used in medical, environmental protection, power and chemical industries.
- Application fields:
Pressure vessel, high pressure storage tank, high pressure pipeline, heat exchanger (chemical processing industry).
Oil and gas pipelines, heat exchanger fittings.
Sewage treatment system.
Pulp and paper industry classifiers, bleaching equipment, storage and processing systems.
Rotary shaft, press roll, blade, impeller, etc. in high-strength corrosion-resistant environment.
Cargo box of ship or truck.
Food processing equipment.
- Asian Metal: Stainless steel products have been relatively tight in the market recently. How is your stock at present?
- Mr. Bi: Recently, the overall price of stainless steel is on the downward trend. In addition, the purchase cost is high, so most traders are reluctant to build large stockpiles. However, the 2205 duplex stainless steel we are currently dealing with belongs to special stainless steel, and the demand is relatively stable. At present, out inventory keeps at the regular level of about 1,000t.
- Asian Metal: At present, the steel market is in the traditional off-season. How is the demand from downstream customers?
- Mr. Bi: On October 27, the National Bureau of Statistics released the financial data of industrial enterprises in the first three quarters of this year, which showed that the total profit of industrial enterprises above designated size in China was 4.59335 trillion yuan, down by 2.1% year on year, 0.4 percentage points higher than that in the previous eight months. This shows that the profit situation of the downstream industry is still not optimistic. At present, the stainless steel market is in the off-season, and end users basically purchase on demand, and it is rare for customers to purchase materials in large quantities.
- Asian Metal: Recently, prices of 304 grade stainless CRC in China have fluctuated greatly, and after the continuous increase in the third quarter, prices began to go down obviously. What do you think is the reason for the sharp price fluctuation?
- Mr. Bi: In the third quarter of this year, mainly supported by higher prices of nickel and the increase in steel mills’ list prices, domestic prices of 304 grade stainless CRC continued to rise by RMB1,500/t or 10%. Among them, the sharp price increase of nickel was the main reason, and during this period, domestic nickel cathode prices climbed by nearly 35%. In addition, steel mills also raised their list prices of stainless steel continuously. The list price of 304/2B 2.0mm*1,219mm*C from Taigang Stainless increased from RMB14,550/t at the end of June to RMB15,900/t late September.
- However, due to the rapid price rise, the demand of downstream customers was restrained to some extent. In addition, affected by the trade war between China and the U.S, the orders of downstream industries also decreased, which dragged domestic prices of 304 grade stainless CRC to go down gradually from the middle of October. Up to now, prices have declined by RMB600/t, or nearly 4%. Current mainstream prices of 304/2B 2.0mm*1,219mm*C produced by Taigang Stainless and JISCO in Wuxi market are only around RMB15,700/t, and those of materials produced by private steel mills have decreased to below RMB15,000/t.
- Asian Metal: Recently, many steel mills have announced the news of maintenance and production reduction. Can this give some support to the market price?
- Mr. Bi: Normally, the production reduction of steel mills will support the market. However, the stainless steel market is in the traditional off-season now, and the overhaul of steel mills at this time will not bring so much support to the market. In view of the relatively weak demand of the downstream industries, the support to the market is not obvious, and stainless steel prices are still on a downward trend as a whole.
- Asian Metal: What do you think of the stainless steel market in 2020?
- Mr. Bi: Although the trade war between China and the U.S shows signs of easing recently and market confidence has been boosted compared with the previous period, there are still many uncertainties about Sino US trade negotiations in the future. Therefore, it is difficult for the demand of downstream industries to recover significantly in a short period of time. In addition, the supply from steel mills is relatively sufficient, so I am not optimistic about the stainless steel market in the year of 2020.
- Asian Metal: Thanks for your time. Wish you a prosperous business!
