[SMM Stainless Steel Daily Review] SS futures mainly fluctuated with a stable bias, and the stainless steel spot market paused with prices holding steady.

SMM reported on February 10 that SS futures showed rangebound and stable trading with narrow fluctuations. Recently, the overall fluctuations in nonferrous futures narrowed, and SS futures also maintained a stable trend. During the night session, prices briefly rose to 13,910 yuan/mt, pulled back after the morning opening, and then returned to a relatively stable trading range, finally closing at 13,825 yuan/mt. In the spot market, affected by both the narrowing fluctuations in futures and the approaching Chinese New Year holiday, most traders have already left the market, resulting in extremely thin trading, with prices mainly holding steady.

The most-traded SS futures contract traded in the doldrums. At 10:30 a.m., the SS2603 contract was quoted at 13,850 yuan/mt, up 80 yuan/mt from the previous trading day. In Wuxi, the spot premium/discount for 304/2B was in the range of 400-600 yuan/mt. In the spot market, the average price of cold-rolled 201/2B coil in Wuxi was 8,500 yuan/mt; the average price of cold-rolled mill-edge 304/2B coil was 14,100 yuan/mt in Wuxi and 14,050 yuan/mt in Foshan; the price of cold-rolled 316L/2B coil in Wuxi was 26,600 yuan/mt, and 26,600 yuan/mt in Foshan; the price of hot-rolled 316L/NO.1 coil in Wuxi was 25,750 yuan/mt; the price of cold-rolled 430/2B coil in both Wuxi and Foshan was 7,800 yuan/mt.

This week, repeated fluctuations in macro sentiment, combined with a significant pullback in precious metal prices, dragged down the overall performance of nonferrous metals futures, and stainless steel futures also experienced wild swings. At the beginning of the week, prices once hit the limit down, and although a corrective rebound gradually unfolded afterwards, the overall weak trend did not fundamentally reverse. The spot market was dragged down by futures fluctuations and moved lower in sync, with market sentiment fluctuating along with futures, overall tending to be cautious and conservative. As the Chinese New Year holiday approached, some traders have already taken leave and left the market this week, leading to a continuous decline in market trading activity. Only during brief periods of corrective rebounds in futures did downstream users conduct small-scale restocking for rigid demand, with overall trading remaining sluggish. Inventory side, social inventory of stainless steel showed a slight buildup this week, but overall inventory levels remained at historically low levels, with relatively limited pressure on traders' stock; coupled with market expectations for a favorable consumption season after the holiday (the traditional "Golden March, Silver April" period), there was no panic selling, which to some extent alleviated the downward pressure on spot prices. In February, stainless steel mills will gradually begin their annual maintenance plans, and planned production is expected to decrease significantly; however, downstream end-use industries will also enter the Chinese New Year holiday simultaneously, leading to a temporary halt in demand. The positive impact of supply reduction is offset by demand contraction, providing limited support to market prices. Cost side, prices of high-grade NPI and stainless steel scrap pulled back, leading to a synchronous decline in stainless steel production costs. Currently, steel mills can still maintain marginal profits, with the cost side providing some bottom-line support. Overall, the stainless steel market this week was primarily driven by futures and macro sentiment, with relatively weak support from spot fundamentals; coupled with factors such as sluggish pre-holiday transactions and traders leaving the market for holidays, the market remained in the doldrums. However, favorable factors such as relatively low inventory, positive post-holiday expectations, and cost support effectively limited the downside room for prices. In the short term, pre-holiday capital sentiment and fluctuations in futures will continue to dominate market trends; going forward, close attention should be paid to macroeconomic developments and the pace of recovery in downstream demand after the holiday.