Fading Favourable Macro Front Shows Signs of Weakness, Stainless Steel Futures and Spot Prices Fluctuate Downward [SMM Stainless Steel Daily Review]

SMM reported on May 19 that today, the SS futures contract exhibited a trend of in the doldrums, ultimately closing with a doji K-line. Recently, as the impact of favourable macro front stimuli gradually faded, market dynamics returned to being dominated by supply and demand fundamentals. Spot prices continued their slight downward trend, a stark contrast to the previous period. Last week, driven by favourable macroeconomic news, the SS futures market took the lead in rising, with the spot market quickly following suit. Downstream demand was concentratedly released in the early stages of the price increase. However, entering this week, demand has significantly weakened. Today, market transactions have been particularly sluggish, with some traders choosing to offer slight discounts to boost sales, further pushing spot prices lower.

In the futures market, the most-traded 2507 contract is in the doldrums. At 10:30 a.m., SS2507 was quoted at 12,975 yuan/mt, down 20 yuan/mt from the previous trading day. In the Wuxi region, the spot premiums/discounts for 304/2B range from 345-545 yuan/mt. In the spot market, the cold-rolled 201/2B coils in both Wuxi and Foshan are quoted at 8,100 yuan/mt. The average price for cold-rolled trimmed 304/2B coils is 13,275 yuan/mt in Wuxi and 13,225 yuan/mt in Foshan. The cold-rolled 316L/2B coil is priced at 23,875 yuan/mt in Wuxi and the same in Foshan. The hot-rolled 316L/NO.1 coil is quoted at 23,100 yuan/mt in both regions. The cold-rolled 430/2B coils in Wuxi and Foshan are both priced at 7,500 yuan/mt.

The influence of macroeconomic policy factors that frequently disrupted the market in the early stages has gradually diminished, with the market returning to a supply and demand-driven logic. Despite stainless steel prices being at a low level in recent years and facing resistance to further declines, the industry's high-supply pattern remains unchanged, with stainless steel production continuing to fluctuate at highs and social inventory remaining elevated. Coupled with the end of the traditional peak consumption season, weak downstream demand, and recent increased price volatility, the market is characterized by a strong wait-and-see sentiment, with significant pressure on traders to sell. Meanwhile, the prices of key raw materials such as high-grade NPI and high-carbon ferrochrome continue to weaken, providing insufficient cost support. If there are no new favourable macro front boosts in the future, under the pattern of high supply and weak demand, stainless steel prices may continue to exhibit a trend of in the doldrums.