[SMM Stainless Steel Daily Review] SHFE nickel remains under pressure, SS futures prices are in the doldrums, stainless steel spot prices decline, and transactions are hard to improve in the off-season.

According to an SMM report on July 2, SS futures fluctuated and trended lower. Dragged by consecutive declines in SHFE nickel, SS futures remained in the doldrums, though support at 14,500 yuan/mt held firm. As of the morning close, the most-traded SS futures contract settled at 14,545 yuan/mt. In the spot market, falling SS futures further weakened trading sentiment in the stainless steel spot market. Traders increasingly sold at a discount, with quoted prices broadly lower; however, amid the consumption off-season and strong wait-and-see sentiment among market entities, overall transactions remained sluggish.

SS futures, the most-traded contract. At 10:15 a.m., SS2608 stood at 14,580 yuan/mt, up 30 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi were in the 390–940 yuan/mt range. In the spot market, the average price of Wuxi cold-rolled 201/2B coil remained flat; cold-rolled trimmed edge 304/2B coil averaged a decline of 50 yuan/mt in Wuxi and 50 yuan/mt in Foshan; the Wuxi cold-rolled 316L/2B coil price rose 50 yuan/mt; hot-rolled 316L/NO.1 coil quotes were unchanged in Wuxi; cold-rolled 430/2B coil prices held flat in both Wuxi and Foshan.

This week, stainless steel futures and spot prices consolidated with a bearish bias. Ex-China macro headwinds, combined with industry sentiment disruptions, intensified market pessimism, fully exposing off-season fundamentals. The market displayed a pattern of macro pressure on futures, weakening off-season demand, traders selling at discounts to cut inventory, supply contraction underpinning inventory, and shrinking steel mill profits. Futures came under pressure from monetary policy and raw material rumors, while spot prices showed resilience, supported by steel mills holding prices firm, but end-user transactions were sluggish, and the broader market leaned bearish. In futures this week, macro headwinds dominated. Easing US-Iran tensions modestly boosted risk appetite, but hawkish Fed rhetoric fanned expectations of rate hikes, weighing on overall valuations across the non-ferrous metals sector. Mid-week, rumors about expanded Indonesian nickel ore quotas surfaced; although officials subsequently denied them, market pessimism had already spread, prompting capital to flee from risk, dragging SS futures further downward. In spot and inventory, the divergence between futures and spot markets was notable this week, with spot prices showing greater resilience than futures. Mainstream steel mills held a firm intention to support prices, effectively defending the price floor. However, as the market entered the traditional consumption off-season, end-user demand continued to weaken. Coupled with the confidence blow from falling futures, end-user wait-and-see sentiment was thick, and transactions were sluggish. Traders pushed strongly to destock, and low-priced cargoes emerged frequently. Meanwhile, steel mill maintenance and production cuts took effect, marginally tightening supply and offsetting off-season demand pressure. This week, social inventory remained largely stable with no significant fluctuations. On the cost and profit side, finished product and raw material price trends diverged this week, further narrowing steel mill profits. Stainless steel spot prices pulled back in tandem with futures, driving the price center lower. But high-grade NPI tightness is expected to persist, with prices resistant to drops and limited declines, and raw material costs staying rigid. Steel product price declines coupled with firm costs directly compressed smelting profits, further intensifying overall industry profitability pressures. Overall, this week, the market was led by macro headwinds, with sluggish rigid demand in the off-season as the core fundamental drag. Steel mills held prices firm and supply contraction supported spot cargo and inventory, but it was difficult to reverse the weak market trend. High-grade NPI cost rigidity continued to pressure steel mill profits. In the short term, futures remained influenced by US Fed policy and Indonesian nickel news, while the weak supply-demand pattern in the off-season proved hard to change. Going forward, key areas to monitor include rate hike expectations, SS futures fluctuations, downstream rigid demand, steel mill maintenance progress, and nickel raw material price trends.