[SMM Stainless Steel Daily Review] SS maintains a stable consolidation trend in the short term, while stainless steel spot prices hold steady and end-users remain cautious.

According to SMM on July 15, SS futures showed an overall pattern of steady consolidation. During the night session, SS futures fell and pulled back, but the decline was partly recovered after the morning opening, and then it moved sideways. As of the close, the most-traded SS contract settled at 14,595 yuan/mt. In the spot market, demand was in the off-season at the time, coupled with recent intensified volatility in SS futures and a lack of clear directional guidance, leading to strong wait-and-see sentiment among downstream end-users and overall sluggish transactions. Spot prices were largely stable, with only occasional low-priced supplies flowing out from traders facing shipment pressure.

The Most-Traded SS Futures Contract. At 10:15 AM, SS2608 quoted at 14,660 yuan/mt, up 120 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi were in the range of 260-610 yuan/mt. In the spot market, the average price of cold-rolled 201/2B coils in Wuxi was unchanged; for cold-rolled edge-rolled 304/2B coils, the average price in Wuxi rose by 25 yuan/mt, while that in Foshan held steady; the price of cold-rolled 316L/2B coils in Wuxi dropped by 100 yuan/mt; for hot-rolled 316L/NO.1 coils, the Wuxi quotation held steady; cold-rolled 430/2B coils in both Wuxi and Foshan were flat.

During the week, macro capital disturbances intensified, and stainless steel futures trended independently on a weak note, with its price movements significantly decoupled from the pace of SHFE nickel and other base metals. Within the week, alternating capital sentiment drove SS futures into wild swings; the earlier key support level of 14,500 yuan/mt was broken, and the overall trend center moved persistently lower, leading to a generally pessimistic trading sentiment. On the spot and inventory front, the break-down and weakening of futures continued to weigh on the spot market, with bearish fundamentals in the off-season being released in a concentrated way. At the time, the market entered the traditional consumption off-season, with inherently weak terminal demand; coupled with the sustained decline in futures further denting market confidence, wait-and-see sentiment dominated among downstream end-users, and purchase willingness remained weak. During the week, mainstream steel mills ended their earlier strategy of holding prices firm, proactively lowering spot guidance prices, which led to a simultaneous pullback in market spot quotations. Transactions in the market showed a pattern of periodic pulse-like releases followed by rapid cooling, with a severe lack of sustained rigid demand, and overall trading returned to a sluggish pattern. Against the backdrop of weak terminal purchases and obstructed destocking, the pace of inventory buildup in the market accelerated notably, social inventory continued to pile up, and pressure on spot fundamentals became more prominent. On the cost and profit side, finished steel and raw material prices fell in tandem during the week; steel mill smelting profits narrowed slightly but remained positive. Affected by the pullback in spot prices and pressure on finished steel profitability, mainstream steel mills lowered their procurement expectations for raw materials, releasing NPI purchase prices at low levels, which caused high-grade NPI market prices to fall in tandem, along with a simultaneous pullback in stainless steel scrap purchase prices, thus shifting the overall raw material cost center downward. Steel mill profits were slightly compressed MoM, but the industry overall did not incur losses, and production profit resilience persisted. Overall, this week the stainless steel market presented a weak pattern of futures breaking below key levels, spot prices following lower and loosening, inventory accelerating buildup, and profits shrinking slightly. Macro capital disturbances dominated the independent weakening of futures, while off-season demand weakness, steel mills' retreat from holding prices firm, and inventory accumulation were the core bearish factors for spot. The weak market pattern is difficult to reverse in the short term. Futures continue to consolidate on a subdued note, and spot prices remain under pressure.