[SMM Stainless Steel Daily Review] News-Driven Disturbances Pushed SS Futures Higher, While Confidence in the Stainless Steel Spot Market Gradually Recovered

SMM reported on March 24 that SS futures strengthened and moved higher. Affected by market fluctuations triggered by news of geopolitical conflict yesterday, SS futures rose sharply in the night session and maintained a relatively strong fluctuating trend in the daytime session, closing at 14,290 yuan/mt by the midday close. In the spot market, boosted by the sharp rise in SS futures, market confidence recovered somewhat; although the increase in traders' spot quotes was limited, both inquiries and transactions showed signs of recovery during the week. The market is currently heavily disturbed by news flow, and changes in the geopolitical conflict still warrant attention.

The most-traded SS futures contract strengthened and moved higher. At 10:15 a.m., SS2605 was quoted at 14,305 yuan/mt, up 125 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi were in the range of 115-315 yuan/mt. In the spot market, the average price of cold-rolled 201/2B coils in Wuxi rose by 50 yuan/mt; for cold-rolled burr-edge 304/2B coils, the average price in Wuxi rose by 50 yuan/mt, while the average price in Foshan held steady; cold-rolled 316L/2B coils in Wuxi were flat; hot-rolled 316L/NO.1 coils were quoted flat in Wuxi; and cold-rolled 430/2B coils in both Wuxi and Foshan were stable.

As the traditional peak consumption season of "Golden March and Silver April" began, the stainless steel market did enter a seasonal recovery window, but end-use demand fell short of expectations. Wait-and-see sentiment among downstream buyers gradually intensified, and the purchasing side only maintained a pace of restocking for rigid demand, without showing the transaction momentum typically expected in the peak season. The market's earlier relatively strong expectations for stainless steel prices continued to fade. Futures side, with geopolitical conflict continuing to escalate and unlikely to ease in the short term, coupled with inflation pressure weakening expectations for US Fed interest rate cuts, uncertainty from a macro perspective kept rising. SS futures as a whole were in the doldrums this week, with the market lacking a clear direction and finding it difficult to provide positive support to the spot market. Inventory side, stainless steel social inventory dropped back slightly this week, driven by downstream cargo pick-up for rigid demand and active shipments by steel mills, but the absolute level remained high. The overall destocking process was slow, and high inventory pressure still clearly constrained the market. Supply side, stainless steel mills maintained a high production schedule, and pressure from incremental supply continued to stand out. Together with elevated social inventory, shipment pressure on steel mills increased significantly. To stimulate transactions and accelerate inventory turnover, major stainless steel mills proactively lowered finished product guidance prices. Cost side, cost support weakened significantly. Although tighter nickel ore approvals kept NPI production costs relatively firm, stainless steel mills are currently mired in losses and showed extremely low acceptance of high-priced raw materials. In addition, steel mills actively pushed for lower prices in purchases, interrupting the rise in NPI prices, which then pulled back slightly, further weakening support from the cost side for gains in finished product prices. Overall, the core contradiction in the stainless steel market this week centered on the mismatch among high supply, elevated inventory, and weakly recovering demand. Persistent macro uncertainty continued to weigh on futures, while downstream end-users remained cautious and only maintained just-in-time procurement. Steel mills faced both shipment pressure and constraints from losses on the procurement pace of raw materials. On balance, stainless steel finished product prices were expected to remain in the doldrums.