Qingshan Section Steel Price Released on July 20: 304/316L Bar Prices Remain Steady Against Mill Production Cuts

On July 20, Qingshan quoted its 304 bar at 14,200 CNY/ton in Wenzhou, 316L bar at 28,500 CNY/ton, 304 wire rod at 14,900 CNY/ton in Dainan, and 316L wire rod at 30,100 CNY/ton in Dainan. Section steel market quotes remained largely flat week-over-week. Against the dual pressures of widespread mill production cuts and persistently high raw material costs, Qingshan's "hold steady" pricing strategy reflects a weak supply-demand balance in the current section steel market.

1. Industry Production Cuts: Over 60% Mills Operating at Loss

According to China Metallurgical News on July 18, over 60% of domestic stainless steel mills are operating at losses and have been forced to initiate production cuts. This round of cuts is concentrated in 200-series and 300-series hot-rolled sheet production, indirectly affecting wire rod and bar material supply for section steel producers. Against the background of nickel prices maintaining a 16,500-18,200 USD/ton range and ferrochromium delivered costs retreating to around 2,850 CNY/ton, mills are clearly favoring production cuts to stabilize prices rather than engaging in price wars.

2. Qingshan Pricing Strategy Analysis

As a leading private mill in China, Qingshan's July 20 quotes changed by less than 100 CNY/ton compared to last week, representing normal adjustments. In the context of widespread industry production cuts, mills are controlling output to stabilize ex-factory prices and avoid destructive price competition. Dainan 304 wire rod quotes are 700 CNY/ton higher than Wenzhou 304 bar, primarily reflecting Dainan's processing premium as a specialized wire rod market.

The high 316L bar Wenzhou quote of 28,500 CNY/ton is directly linked to nickel-molybdenum alloy costs. 316L contains approximately 2%-3% molybdenum, and with molybdenum-iron prices rising around 15% year-to-date, the 316L series commands a premium of approximately 14,000 CNY/ton over 304, clearly demonstrating alloy cost transmission.

3. Transmission to Section Steel Processing Enterprises

For profiled materials manufacturers, Qingshan's stable pricing means raw material procurement costs are controllable. However, on the order side, due to downstream users' bearish sentiment on the market outlook, most are adopting "small batch, multiple delivery" procurement models with order cycles generally shortened to within 15 days. Profiled materials manufacturers face a dilemma in pricing: raw material cost support discourages price cuts, but insufficient orders require discount promotions.

It is recommended that profiled materials manufacturers adopt a "raw material linkage plus order grading" strategy: monthly linkage pricing for long-term cooperative customers, spot pricing for short-term inquiry customers. At the same time, strengthen inventory turnover management, keeping wire rod inventory within 15-20 days of usage to reduce raw material price volatility risk.

4. Downstream Procurement Recommendations

For downstream procurement users of stainless steel profiled materials, V-shaped wire, and wedge wire products, the current stable Qingshan pricing represents a relatively favorable procurement window. It is recommended that users establish monthly framework agreements with profiled materials manufacturers with stable raw material supply capabilities, locking in supply prices for the next 1-2 months, avoiding the impact of short-term price fluctuations on production plans.

For high-end profiled material products such as 316L and duplex steel 2205, due to the relatively high proportion of alloy costs and concentrated supply, it is recommended to sign quarterly or even semi-annual long-term agreements with manufacturers to further reduce the impact of raw material fluctuations on procurement costs.

5. Future Outlook

In the short term, mills' production cut price-protection strategy is expected to continue until end of August, with low probability of significant volatility in Qingshan prices. In the medium term, attention should be paid to Indonesian nickel ore export policy developments, domestic infrastructure project launch pace, and the cost impact of EU Carbon Border Adjustment Mechanism (CBAM) on exported section steel. In the long term, the industry is moving toward high-end, customized and intelligent development, narrowing the scope of pure price competition, with technological innovation and service capability becoming the core competitive advantages for profiled materials manufacturers.