[SMM Stainless Steel Daily Review] SS Futures Fluctuated and Pulled Back; Stainless Steel Spot Prices Held Steady

SMM reported on March 3 that SS futures pulled back after fluctuating downward. Base metals futures generally showed a pullback trend, and SS moved lower in tandem, eventually closing at 14,185 yuan/mt. In the spot market, although SS futures pulled back, supported by cost support and boosted by expectations for the “Golden March and Silver April” peak season, stainless steel spot quotes held steady. Today, a major stainless steel producer released a new round of guidance prices, which were broadly stable; the market expected stainless steel production to be relatively high in March, and steel mills might focus on active shipments during the month, with the upside in prices potentially capped by incremental supply.

The most-traded SS futures contract fluctuated downward. At 10:30 a.m., SS2604 was at 14,165 yuan/mt, up 5 yuan/mt from the previous trading day. In Wuxi, spot premiums/discounts for 304/2B were in the 355-555 yuan/mt range. In the spot market, Wuxi cold-rolled 201/2B coils were generally stable; for cold-rolled trimmed-edge 304/2B coils, the average price in Wuxi was stable and the average price in Foshan was stable; cold-rolled 316L/2B coils in Wuxi rose by 500 yuan/mt; hot-rolled 316L/NO.1 coils in Wuxi rose by 400 yuan/mt; cold-rolled 430/2B coils in both Wuxi and Foshan were stable.

The stainless steel market gradually recovered, with SS futures strengthening and moving higher. Driven by warming expectations for the traditional “Golden March and Silver April” consumption peak season and continued fermentation of news on Indonesian nickel ore, market participants were strongly bullish. However, the recovery on the spot side was slow, with some traders and downstream end-users yet to resume operations. Market trading activity had not fully recovered, with only a small number of rigid-demand orders concluded during the week, presenting a clear pattern of “strong futures, weak spot.” On the inventory side, stainless steel social inventory showed a sharp seasonal inventory buildup, mainly due to the suspension of trading during the Chinese New Year holiday, continued arrivals of cargo, and some resources awaiting pick up goods. From an industry perspective, inventory buildup around the Chinese New Year is normal, and the magnitude of this buildup did not exceed market expectations. Market confidence was not materially impacted, traders did not engage in panic shipments, and short-term inventory pressure remained within a controllable range. On the supply side, domestic stainless steel mills carried out concentrated annual maintenance in February, with sizable production cuts and a sharp drop in production, easing short-term supply-side pressure. However, key attention should be paid to March, when steel mills will enter a phase of concentrated production resumptions, and production is expected to rise sharply. This will test the market’s ability to absorb demand during the “Golden March and Silver April” peak season, and the supply-demand pattern may see a phased adjustment. Cost support continued to strengthen. Related news on Indonesian nickel ore continued to ferment, pushing ore prices steadily higher, which in turn lifted NPI production costs, with high-grade NPI prices climbing steadily. Although trading in the high-grade NPI market was relatively light this week and major stainless steel mills had yet to accept the current high prices, with low purchase willingness, strong bullish sentiment and expectations of tight raw material supply made it difficult for prices to move lower. This provided solid support for stainless steel production costs, and steel mills still maintained reasonable profitability. Overall, the stainless steel market this week exhibited the core characteristic of “strong expectations, weak reality.” Strength in futures, improving expectations for the peak season, and relatively strong support from the cost side jointly boosted market confidence. However, weak spot trading, a sharp social inventory buildup, and supply pressure brought by concentrated production resumptions at steel mills in March also imposed clear constraints on the market. At present, the market’s core game centers on the pace of downstream demand recovery after the holiday, the progress of inventory digestion, and the implementation of steel mills resuming production in March. Going forward, close tracking of the above factors is needed to determine the direction of market trends.