China's Spot Stainless Steel Prices Are Headed for a New 2011 Low

China's spot stainless steel prices are headed for a new 2011 low after dropping more than 3% over the weekend, as US and European debt concerns force LME nickel prices even lower. Traders are offering Taigang's benchmark 304 2mm 2B stainless cold rolled coil at 22, 400-22, 500 ($3, 467-3, 483) yuan per tonne in the main Wuxi market on Monday, down from 23, 200-23, 300 yuan on Friday. This is close to the 2011 low of 22, 000 yuan in late June. "Few people are buying in the spot market now, and the LME nickel price will continue to fall throughout Monday and Tuesday, " a trader in Wuxi said, adding that spot stainless prices could hit a fresh 2011 low this very week. Standard & Poor's reduction of the US debt rating to AA+ from AAA caused market alarm and nickel prices followed other commodities in falling further on Monday. Three-month LME nickel dropped to $22, 418 per tonne by GMT 0400 on Monday, down from Friday's close of $22, 505 and more than 3% below settlement, which was already a 25-day low. Jinchuan Group, China's largest nickel producer, also lowered its benchmark offer by 5, 000 yuan on Monday to 169, 000 yuan per tonne. "We have no choice but to wait and see if there is good news from the US Federal Reserve's meeting on August 9, " a stainless trader in Shanghai said. "If [there's no good news], LME nickel will drop below $21, 000 soon. " Meanwhile, stainless stocks in China continue to fall with Wuxi inventory down to 207, 285 tonnes in early August, 13% lower than in mid-May, according to 51bxg. Com. "Distributors may delay taking stocks from stainless mills, so I expect stainless stocks in the Wuxi market will decrease, " the first trader said. Chinese market demand is not expected to improve until September or October when the cooler weather heralds a seasonal uptick in production. All material subject to strictly enforced copyright laws. © Euromoney Institutional Investor PLC. Source: metalbulletin.com