SHANGHAI — Stainless steel market participants in China’s stainless steel hub of Wuxi, located some 87 miles from Shanghai, are relatively downbeat amid a lull in the market following a modest round of buying after the Chinese New Year.
While sales to end-users starting in late February have been reported as reasonably good, prices have fallen slightly and stocks in Wuxi are starting to rise again.
While demand from some sectors—notably elevator producers, construction and manufacturing—has picked up, customers in these areas are buying cautiously, market participants said.
"Sales since late February have been fairly strong, although prices haven’t changed a lot due to the high inventory," one stainless distributor said. "Our sales in the first two weeks of March reached the same level as in the peak season in past years."
Subsidies on purchases of home appliances in rural areas ended Jan. 31, keeping a lid on demand.
Purchasing activity has also dried up because buyers fear a continued decline in prices.
"End-users are unwilling to buy more since they think the price may go down further," the stainless steel distributor said. Mills are, therefore, likely to pull back their list prices, having tried to prop up the market with price increases over the past few months.
As inventories rise and buying continues to slip, mills are still churning out steel.
Meanwhile, China’s stainless export market has also lost ground.
Stainless flat product exports fell to 133,837 tonnes in February, down 8.5 percent from 146,206 tonnes a month earlier, due to the Chinese New Year holiday, Chinese customs data show.
The weeklong national break during February delayed some shipments, traders told AMM sister publication Steel First.
Exports to China’s main destinations—Taiwan and South Korea—were stable in February, with Taiwan taking 50,093 tonnes, up 1.2 percent year on year, and South Korea’s intake rising 1.4 percent to 29,489 tonnes.
"Demand from Taiwan’s pressure vessel and construction sectors is good," a mill source in Zhejiang said.
However, weak demand from other regions forced Chinese mills to give more discounts on export bookings.
"Mills are offering unusually cheap export prices, which makes our own offers uncompetitive," according to a distributor in Foshan, Guangzhou province.
A version of this article was first published by AMM sister publication Steel First.