The global stainless steel market is enjoying a similar rally to that seen by carbon steel, supported by tight supply and record levels for raw materials.

CHINA
China's stainless steel market and futures prices increased last week. At the same time, nickel futures on the London Metal Exchange also hit a new high.

On 7 January on the Shanghai Futures Exchange March 2021 stainless steel futures closed at CNY 14,725/tonne ($2,276/t), up by 4.95% compared with Wednesday. Meanwhile, the three-month nickel price on the London Metals Exchange crossed $18,000/t, hitting its highest level since September 2019 and a 2.3% gain on Wednesday's closing price. 

The rise in China's stainless steel prices is mainly driven by rising raw materials costs. At the same time, domestic stainless steel inventory has dropped significantly. The shortage of supply has caused serious shortages for certain sizes on the market, and prices have been driven higher as a result. An outbreak of end-user buying has caused some steel mills to stop taking orders, and some existing March orders have been rescheduled to May. In parts of China, freight restrictions have also exacerbated the imbalance between supply and demand.

As many Chinese smelters are using recently purchased high-priced nickel concentrate, the cost of smelting nickel pig iron is still high. Indonesia has increased its benchmark price for nickel. In addition, the continued unrest in New Caledonia, has exacerbated market participants' concerns about supply.