[SMM Stainless Steel Daily Review] SS Futures Struggled to Break Out of Rangebound Trading, While Spot Prices Held Steady Amid Active Shipments

SMM reported on March 13 that SS futures remained in the doldrums. However, after opening higher in the night session, SS fluctuated downward, with the pace of the pullback accelerating further in the afternoon, and closed at 14,190 yuan/mt. In the spot market, affected by fluctuations in futures, quotes were largely stable, with limited weekly fluctuations. Although recovering downstream demand and cargo pick-up for earlier orders provided support, and stainless steel social inventory stopped rising and pulled back this week, market expectations remained mediocre, and merchants mostly focused on stabilizing prices while actively making shipments.

The most-traded SS contract fluctuated higher. As of 10:15 a.m., SS2605 stood at 14,275 yuan/mt, down 15 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi were in the 245-445 yuan/mt range. In the spot market, cold-rolled 201/2B coil in Wuxi was basically stable; for cold-rolled burr-edged 304/2B coil, average prices in both Wuxi and Foshan were basically stable; cold-rolled 316L/2B coil in Wuxi was basically stable; hot-rolled 316L/NO.1 coil quotes in Wuxi were basically stable; and cold-rolled 430/2B coil in both Wuxi and Foshan was basically stable.

As the traditional peak consumption season of "Golden March and Silver April" arrived, the stainless steel market entered a window for demand recovery, with downstream end-users gradually recovering and inquiry and purchase activity picking up notably in the near term. However, stainless steel spot prices overall remained basically stable, with no obvious fluctuations. End-user procurement was still mainly driven by rigid demand, and the full vibrancy of the peak season had yet to emerge, while wait-and-see sentiment still lingered in the market. On the futures side, affected by multiple factors including the continued escalation of geopolitical conflict in Iran, the US restarting a tariff war, and intensified fluctuations in the US dollar exchange rate, uncertainty in macro news increased significantly. This week, SS futures moved sideways, showing mixed performance and no clear direction. On the inventory side, driven by both recovering downstream demand and cargo pick-up for earlier orders, stainless steel social inventory declined this week, ending the sharp accumulation trend since February. However, inventory levels remained high, and destocking pressure had not been fully eased. Although inventory stopping its rise and pulling back released positive signals and boosted market confidence to some extent, high inventory levels coupled with expectations of increased supply in March still imposed some constraints on the market. Traders maintained a steady pace of shipments, with no aggressive selling.

Supply side, earlier production cuts and maintenance at steel mills had fully ended, and the expected stainless steel production schedule for March remained high, with pressure from increased supply gradually being released. Affected by the sharp buildup in social inventory in February, stainless steel mills are currently focusing on stabilizing prices and making shipments. Recently, guidance prices from major stainless steel mills have been announced unchanged consecutively, proactively controlling price fluctuations, accelerating inventory turnover, and easing the dual pressure from supply and inventory. However, expectations of high supply within the month still formed a potential restraint on the market. Cost support continued to strengthen. Recently, mainstream stainless steel mills kept their procurement prices for high-grade NPI relatively low, which to some extent restrained the upward momentum of high-grade NPI. However, nickel ore prices remained high, driving NPI prices to continue edging up slowly. High-carbon ferrochrome prices also strengthened, supported by both tight spot availability and rising chrome ore prices, further reinforcing cost support for stainless steel. Overall, the core contradiction in the stainless steel market this week was the mismatch between expectations for high supply, the pace of demand recovery, and the progress of inventory destocking. Although the market formally entered the traditional peak consumption season, favorable factors including recovering downstream demand, inventory stopping its rise and pulling back, and solid cost support provided support to the market. However, amid strong uncertainty in macro news, an overall cautious market sentiment, and persistently high supply and generally elevated inventory during the month, stainless steel prices are expected to remain generally stable with slight rise.