[SMM Stainless Steel Daily Review] SS Futures Were in the Doldrums, While Spot Stainless Steel Held Steady, with Rigid Demand Dominating

SMM, March 11: SS futures remained in the doldrums. Since March, they had continued to move sideways in the 14,000-14,400 yuan/mt range. Affected by the continued escalation of geopolitical conflicts, SS futures extended their fluctuating trend and closed the morning session at 14,210 yuan/mt. In the spot market, driven by the sideways movement in futures, spot traders' quotations generally held steady. Downstream end-users mainly made just-in-time procurement, while earlier bullish sentiment had been fully exhausted, leaving insufficient willingness for advance purchases and stockpiling. However, as the traditional peak season gradually approached, underlying demand was still able to hold up, and market participants expected stainless steel prices to continue receiving relatively strong cost support within the month.

The most-traded SS futures contract fluctuated downward. At 10:15 a.m., SS2604 was quoted at 14,105 yuan/mt, down 190 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi stood in the 400-600 yuan/mt range. In the spot market, cold-rolled 201/2B coil in Wuxi generally held steady; for cold-rolled burr-edge 304/2B coil, average prices in both Wuxi and Foshan held steady; cold-rolled 316L/2B coil in Wuxi held steady; for hot-rolled 316L/NO.1 coil, quotations in Wuxi held steady; and cold-rolled 430/2B coil in both Wuxi and Foshan held steady.

As the traditional peak consumption season of "Golden March and Silver April" began, the stainless steel market entered a window for demand recovery. Downstream demand gradually resumed as operations and production restarted after the Chinese New Year holiday, and demand showed a gradual recovery trend. However, although transactions improved from the earlier period, the market had yet to show the briskness typical of the peak season. End-user purchasing remained focused on just-in-time procurement, with relatively low willingness for stockpiling. On the futures side, safe-haven demand triggered by geopolitical conflicts strengthened the US dollar, limiting the upward momentum of SS futures. Overall this week, the market mainly moved in a fluctuating trend and failed to form a sustained rise. Inventory side, stainless steel social inventory did not accumulate further this week, but overall remained at a high level, and elevated inventory continued to constrain the market. Although inventory did not continue to increase, high inventory combined with slower-than-expected demand recovery meant destocking pressure persisted, and traders remained cautious in the pace of shipments. Supply side, the maintenance-related production cuts at steel mills in February had fully ended, and steel mills' March production schedules increased sharply, significantly releasing pressure from additional supply. In the face of supply pressure, steel mills mainly focused on stabilizing prices while actively making shipments, proactively controlling price fluctuations and accelerating inventory turnover to ease supply-side pressure, but expectations of oversupply still weighed on the market. Cost support remained relatively strong, with the impact of news surrounding Indonesian nickel ore still ongoing. Ore prices held up well, pushing up NPI production costs, while high-grade NPI prices rose steadily. At present, stainless steel mills had relatively narrow profit margins and limited acceptance of high-priced NPI. Transactions in high-grade NPI were relatively sluggish this week, but bullish sentiment in the NPI market remained strong, with low-priced cargoes hard to find, and the cost side effectively restrained declines in stainless steel prices. Overall, the stainless steel market this week showed the core features of “rising supply, weak demand recovery, strong cost support, and elevated inventory,” with the key contradiction being the mismatch between supply growth and the pace of demand recovery. Although peak-season expectations remained and cost support was strong, the increase in supply, inventory at high levels, and weaker-than-expected demand recovery led to waning market confidence. The current focus is on the progress of demand recovery, inventory digestion capacity, and steel mill shipments. Going forward, close attention should be paid to demand release, inventory drawdown, and changes in nickel ore prices to assess the market trend.