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Although the development of the stainless steel industry in Asia was different last year, similar problems have occurred in China and Japan, the two largest markets in the region so far this year, and that is the weak demand. Most stainless steel manufacturers claim that consumers are not willing to spend. Although Chinese manufacturers have surprisingly boosted domestic prices, in Japan prices have fallen for the fifth consecutive month.
The Chinese spot market has slowed down in recent weeks due to the start of the Spring Festival holiday, but this does not mask the fact that the domestic market is experiencing weak demand. In fact, it is the insufficiency of demand that has caused disagreements among major stainless steel producers in China.
In January, if major alloy producers in China adopted the alloy surcharge mechanism, they would discuss how to deal with domestic prices. However, no agreement was reached. It is said that some steel mills are proposing price increases in February, but other mills believe that prices need to be reduced. However, the steel mills announced in January that they will reduce production by 40% month-on-month to stimulate demand. Although it failed to reach an agreement, the price of domestic cold-rolled 304 in January rose by 150 yuan/ton to reach 3,190 yuan/ton.
In Japan, producers once again lowered their prices, mainly because domestic steel mills reduced their surcharges and the lack of domestic consumer demand. However, Japanese manufacturers can only feel the impact of the US economic problems on them because orders from end users in North America have fallen. Japanese wholesalers and traders are also experiencing daily downturns. Although the inventory level is not high, it is difficult for wholesalers and traders to transfer resources due to the high prices. However, since domestic prices fell by 520 yen/kg in January, which is 10 yen/kg cheaper than in December, wholesalers and traders are likely to continue facing a difficult period.
In other parts of Asia, the stainless steel market is strong. In view of the good demand base, Taiwan’s Uican Steel announced in January that it will raise prices. Last year and earlier this year, the reduction in production has already played a role. In January, the price of cold-rolled 304 in Taiwan was about TWD 135,500/t.
Most of the stainless steel market in Asia is currently looking forward to the end of the Spring Festival holiday because it is expected that consumers will return to the market. However, whether this can stimulate long-term demand is still unknown. The steel mill currently only hopes that this happens and does not expect it to happen.
Demand for stainless market in China and Japan shrinks
Although we have entered a new year, there are still common problems in the Asian market. Since consumers believe that there is uncertainty in the market, most of them take a wait-and-see attitude, so demand in the region continues to be weak.