1. Stainless Steel Bar and Wire Rod Price Spread Situation

Recently, Qingshan stainless steel bar futures prices have been rising continuously, while wire rod prices have shown mixed movements — 304 has declined, and 316L has increased.

According to market feedback, the main reason lies in weak long-term demand in the wire rod market. Most wire rod traders reported that July’s transactions showed little improvement.

Tracking the bar–wire price spread since July, the spread initially expanded positively to around 800 RMB/ton, but narrowed mid-month, reaching a low of around 1,300 RMB/ton in the opposite direction.

In terms of profitability, steel mills reported that wire rod margins are slightly higher than those of bars.

From a cost perspective, for 304 stainless steel smelting materials:

• Purchased high-nickel iron: 1,110 RMB/nickel

• Self-produced high-nickel iron: 1,119 RMB/nickel

• High-carbon ferrochrome: 8,700 RMB/50 base tons

• Electrolytic manganese: 13,150 RMB/ton

In Wenzhou, 304 stainless steel scrap is priced at 10,500 RMB/ton (excluding tax).

Estimated 304 hot-rolled production costs by different smelting routes:

• Scrap stainless steel process: 14,213 RMB/ton

• Purchased high-nickel iron process: 14,330 RMB/ton

• Low-nickel iron + pure nickel process: 19,257 RMB/ton

• Self-produced high-nickel iron process: 14,090 RMB/ton

2. Analysis of Stainless Steel Futures Trends

During the day, stainless steel futures opened lower and continued to decline, closing down 0.75% at 15,295 RMB/ton. The daily K-line closed bearish, with a high of 15,420 RMB/ton and a low of 15,200 RMB/ton, showing a price fluctuation of 220 RMB/ton.

Trading data:
The daily trading volume reached 149,000 lots, with a reduction of 12,335 lots in open interest.
Total open interest value was 762 million RMB, while capital outflow amounted to 141 million RMB, indicating a cautious sentiment among investors.

Technical indicators:
After reaching a new high of 15,640 RMB/ton, the price pattern on the daily chart showed a “one bearish candle engulfing three bullish candles”, meaning that the gains of the previous three sessions were nearly erased. This suggests a lack of confidence among bullish funds, with many short-term traders taking profits and exiting the market.
The MACD indicator shows shrinking red bars, and the fast and slow lines are converging, reflecting weakening bullish momentum.

Overall, the market remains in a high-level consolidation phase, with increasing risk aversion and limited upside potential.
Based on current cyclical movements, stainless steel futures are expected to stay range-bound in August, and a major upward trend is unlikely to emerge.

3. Stainless Steel Bar Production Overview

In July, the overall production of stainless steel bars showed little change compared with the previous month. As shown in the table above, some producers increased their wire rod output, mainly of 200-series wire, due to the transfer of molten steel from coil production lines.

Steel mills that primarily fulfill futures orders maintained stable production levels, while a few 400-series wire producers saw a decline in bar and wire output due to power restrictions.

Looking ahead to August, most steel mills plan to keep their production schedules unchanged, suggesting that the supply side will have limited influence on price movements. The key driver of market trends remains the downstream demand.

4. Market Forecast

Recently, macroeconomic factors have led to a more pessimistic market sentiment. Although bar prices tend to rise alongside the market but resist declines, mixed signals and weak transactions reported by many second- and third-tier steelmakers indicate that market confidence remains fragile.

For wire rods, despite weak fundamentals, the cost-side support from raw materials remains strong, thus limiting further downside potential.

As for bars, demand for futures orders has improved, and expectations for stronger consumption in the upcoming peak season are gradually emerging. Under the combined outlook of steady supply and rising demand, bar prices are expected to maintain a relatively firm trend in the near term.