SS Futures Hit New Five-Year Low Again, Supply-Demand Imbalance in Stainless Steel Off-Season Hard to Ease [SMM Stainless Steel Futures Weekly Review]

SMM data shows that the most-traded SS contract declined this week. As of 10:30 on June 13, the SS2508 contract was quoted at 12,540 yuan/mt, down 160 yuan/mt WoW.

Macro front, on June 11, China and the US held the second round of economic and trade consultations in London, reaching a framework agreement in principle and broadening the scope for future cooperation. This alleviated market concerns about escalating trade frictions and injected positive sentiment into the stainless steel futures market in the short term. The US CPI rose 2.4% YoY in May, below the expected 2.5%, raising expectations for US Fed interest rate cuts within the year. The US dollar index came under pressure, providing support for nickel, stainless steel, and other commodity prices. During the week, the National Development and Reform Commission (NDRC) proposed establishing new-type policy-based financial instruments to facilitate the implementation of major engineering projects in people's livelihoods, which is expected to drive effective investment exceeding 6 trillion yuan and stimulate demand and application for stainless steel in infrastructure and other sectors. However, on June 12, the US Department of Commerce announced new tariffs on common household appliances made of steel components, such as washing machines and dishwashers, limiting the export consumption of downstream stainless steel products and exerting a negative impact on the market.

Fundamentally, under the influence of the traditional consumption off-season, the stainless steel market has gradually shown signs of weak demand, with upstream stainless steel mills, agents, and traders generally facing increased pressure to ship goods. Driven by losses, stainless steel mills implemented price-capping strategies for downstream selling prices. Despite successive price reductions in the early stage, transaction volumes failed to improve. During the week, due to high finished product inventories, steel mills temporarily canceled the price-capping policy, leading to a rapid decline in stainless steel prices. Although the price-capping policy was subsequently reinstated, stainless steel quotes remained at low levels.

Overall, the mismatch between weak stainless steel market consumption and relatively high steel production has intensified. Although the SS futures market hit a new five-year low during the week, the lack of upward rebound momentum amid market pessimism means that the SS futures market will continue to fluctuate at lows.