[SMM Stainless Steel Daily Review] SS Futures Fluctuated Higher, and Stainless Steel Spot Prices Followed the Upward Trend

SMM News, March 23: SS futures fluctuated higher and tested upward. Although the escalation of the geopolitical conflict in Iran dragged down the overall nonferrous futures market, nickel and SS futures extended their strong upward momentum, closing at 14,140 yuan/mt by midday. In the spot market, steel mill agents raised quotes, and coupled with the strong performance of SS futures, stainless steel spot prices moved higher intraday. Driven by the mentality of rushing to buy amid continuous price rise and holding back amid price downturn, downstream end-users saw some improvement in inquiry and transaction activity. At present, stainless steel mills are under significant cost pressure, and the market maintains strong expectations for cost support to prices; although macro factors may make a substantial price rise difficult, room for pullback is also constrained.

The most-traded SS futures contract strengthened and tested higher. At 10:15 a.m., SS2605 was quoted at 14,180 yuan/mt, up 30 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi stood in the range of 190-390 yuan/mt. In the spot market, the average price of cold-rolled 201/2B coils in Wuxi rose by 50 yuan/mt; for cold-rolled burr-edge 304/2B coils, the average price in Wuxi held steady, while the average price in Foshan rose by 50 yuan/mt; cold-rolled 316L/2B coils in Wuxi were flat; hot-rolled 316L/NO.1 coils were quoted unchanged in Wuxi; and cold-rolled 430/2B coils in both Wuxi and Foshan held steady.

As the traditional peak consumption season of "Golden March and Silver April" arrived, the stainless steel market entered a seasonal recovery window, but end-use demand fell short of expectations. Downstream wait-and-see sentiment gradually intensified, and the procurement side only maintained a pace of restocking for rigid demand, without showing the transaction momentum typically seen in the peak season. The market's earlier bullish expectations for stainless steel prices continued to fade. On the futures side, geopolitical conflicts kept escalating and were unlikely to ease in the short term. Coupled with inflation pressure weakening expectations for US Fed interest rate cuts, uncertainty from the macro perspective continued to rise. This week, SS futures as a whole remained in the doldrums, lacking a clear directional trend and making it difficult to provide positive support to the spot market. Inventory side, stainless steel social inventory this week dropped back slightly, driven by downstream cargo pick-up for rigid demand and active shipments by steel mills, but the absolute level remained high. The destocking process was generally slow, and high inventory pressure still imposed obvious constraints on the market. Supply side, stainless steel mills maintained a high production schedule, and incremental supply pressure continued to stand out. Combined with elevated social inventory, shipment pressure on steel mills increased significantly; to stimulate transactions and accelerate inventory turnover, major stainless steel mills had proactively lowered finished product guidance prices. Cost support weakened markedly. Although tighter nickel ore approvals kept NPI production costs relatively firm, stainless steel mills are currently mired in losses and showed extremely low acceptance of high-priced raw materials. In addition, steel mills actively pushed for lower prices in purchases, interrupting the rise in NPI prices and causing them to drop back slightly, further weakening the support from the cost side for gains in finished product prices. Overall, the core contradiction in the stainless steel market this week centered on the mismatch among high supply, elevated inventory, and weakly recovering demand. Heightened macro uncertainty continued to weigh on futures, while downstream end-users remained cautious and only maintained just-in-time procurement. Steel mills faced both shipment pressure and constraints on the pace of raw material procurement due to losses. On balance, stainless steel finished product prices were expected to remain in the doldrums.