Futures Strengthen While Raw Materials Hold Steady: Cost Pressure on Stainless Steel Profiles Remains Limited

On July 31, stainless steel futures performed firmly, with both nickel and stainless steel contracts moving higher, while spot prices and major raw materials showed no clear follow-through. The market currently presents a pattern of stronger futures, steady raw materials and cautious spot trading. For stainless steel profile manufacturers, the cost side has not yet created obvious upward pressure, although it remains important to watch whether futures gains can reach raw-material procurement and end-user orders.

Nickel and stainless steel futures strengthen together

On July 31, the main nickel futures contract closed at CNY 131,680 per ton, up CNY 420 from the previous session. The main stainless steel futures contract closed at CNY 14,635 per ton, up CNY 40.

The simultaneous rise suggests an improvement in market expectations. Nickel is an important input for stainless steel and influences the cost outlook for 300-series products. Higher stainless steel futures may also strengthen the willingness of traders and some producers to support quotations.

However, a futures rise does not automatically mean an immediate broad increase in spot prices. Futures reflect expectations for future supply, demand and costs, while spot prices are also shaped by inventories, transactions, orders and cash flow. Downstream purchasing remains cautious and focused on rigid demand, so follow-through will depend on actual trading volume and procurement rhythm.

Major raw materials remain broadly stable

On July 31, high-nickel pig iron quotations were broadly unchanged. Tax-included ex-works prices for material containing around 10% nickel were about CNY 1,145 per nickel unit in Jiangsu, CNY 1,150 in Shandong, CNY 1,135 in Inner Mongolia and CNY 1,145 in Fujian.

Ferro-molybdenum prices were also stable at around CNY 335,500 per 60%-base ton in Luoyang, Xuzhou, Jinzhou, Luanchuan and Hebei. High-chromium prices were likewise steady, at about CNY 8,000 per 50-base ton in Shanxi and Inner Mongolia, with some regional quotes around CNY 8,100.

Nickel pig iron, ferro-molybdenum and ferrochrome are key cost inputs. Their lack of a synchronized rise indicates that mills and processors are not yet facing a broad expansion in raw-material pressure. For profile manufacturers, this stability supports more consistent quotations and allows purchasing to follow actual orders rather than short-term futures movements.

304 scrap and billets have not followed futures higher

Stainless scrap and billets are also important cost indicators. On July 31, tax-excluded prices for first-grade 304 scrap were broadly unchanged: CNY 10,000 per ton in Shanghai, CNY 10,150 in Da'nan, CNY 10,700 in Foshan and CNY 10,300 in Wenzhou.

Tax-included quotations for 304 hot-rolled tube billets in Foshan were also largely stable, with major specifications around CNY 13,800-14,200 per ton. Some 201-series hot-rolled billet specifications rose by CNY 100, but the move has not become broad-based.

The absence of a synchronized rise in scrap and billets shows that the spot market is still observing the futures move. Traders and downstream buyers have not significantly expanded purchasing, leaving limited transaction-based support for a further rise. Stable 304 scrap and billet prices can ease procurement pressure for profile manufacturers, particularly on small-batch customized orders.

Cost pressure on profiles remains limited for now

The cost of stainless steel profiles includes not only steel but also tooling, forming, welding, straightening, surface treatment, packaging and transportation.

With raw materials broadly stable, short-term pressure may come less from steel itself and more from higher unit processing costs on small orders, longer changeover and commissioning times for non-standard products, mismatches between material specifications and customer requirements, tight delivery schedules, and changes in logistics, energy and surface-treatment costs.

Therefore, as long as nickel pig iron, ferro-molybdenum, scrap and billets do not rise significantly with futures, the comprehensive cost of stainless steel profiles is unlikely to jump sharply. If the futures rally continues, mills raise ex-works prices or traders reduce low-priced spot supply, however, pressure may gradually reach the profile market.

Futures are firm, but the spot market remains cautious

The market's most visible feature is the contrast between rising futures and a mild spot response. Construction decoration, machinery processing and general industrial applications are still buying as needed, and customers remain sensitive to price changes. New energy, chemical equipment, marine engineering and high-end equipment applications have steadier demand for corrosion-resistant, precision and customized products, where performance, dimensional accuracy and delivery are also important.

Profile manufacturers should therefore avoid simply following futures higher in their quotations. For longer delivery orders, they can shorten quotation validity or include a discussion mechanism for raw-material price fluctuations.

Whether the futures rise reaches spot prices remains to be seen

Three factors will determine whether the current futures rise becomes a sustained spot-market increase. First, whether raw-material prices continue higher. If nickel pig iron, ferro-molybdenum, ferrochrome and stainless scrap remain stable, the cost basis for a spot rise will be limited.

Second, whether mills follow with new pricing policies. Mill ex-works prices are a key market reference. If major mills remain stable, the basis for large increases by traders and processors is limited; if mills raise prices, quotations may follow, but sustainability will depend on downstream acceptance.

Third, whether end-user demand actually recovers. Without a clear increase in orders, a price rise may remain only on quotation sheets, creating a market with prices but few transactions. Actual purchasing in fasteners, machinery parts, chemical equipment, vehicle components and export orders should be watched closely.

Order-taking should remain flexible

Under the current combination of stable costs and firm futures, profile manufacturers should keep order-taking flexible. Standard-product quotations should not be raised excessively on the basis of a short-term futures move. Longer delivery orders should use shorter quotation validity, or staged confirmation of material prices where necessary.

Small-batch non-standard orders should include tooling, changeovers, processing loss, packaging and transportation rather than focusing only on steel. Companies can also continue developing high-precision, corrosion-resistant and customized profiles. Products with technical, precision and delivery advantages generally have stronger pricing resilience than purely standardized products.

Outlook

Overall, the July 31 stainless steel market showed stronger futures, stable raw materials and cautious spot trading. The rise in nickel and stainless steel futures has improved sentiment, but stable nickel pig iron, ferro-molybdenum, ferrochrome, 304 scrap and billets indicate that the cost side has not yet entered a broad upward phase.

The market may remain range-bound in early August. Firm futures can provide support to spot prices, but without a clear increase in end-user demand, the basis for a sharp spot-market rise remains limited. For stainless steel profile manufacturers, a strategy of cautious purchasing, flexible quotations and production based on sales is currently more appropriate. Actual orders and customer payment should be valued alongside futures and raw-material changes, avoiding inventory risk from chasing the market higher.