[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 geopolitical conflict in Iran weighed on the overall nonferrous futures market, nickel and SS futures maintained strong upward momentum, closing at 14,140 yuan/mt by midday. In the spot market, steel mill agents raised quotations, and together with the strong performance of SS futures, stainless steel spot prices moved higher during the day. Driven by the mindset to rush to buy amid continuous price rise and hold back amid price downturn, downstream end-users saw some improvement in inquiry and trading activity. At present, stainless steel mills are under significant cost pressure, and the market holds strong expectations for cost support to prices. Although macro factors may make it difficult for prices to rise sharply, room for pullback is also constrained.

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

Entering the traditional September-October peak season, the stainless steel market saw a seasonal recovery window, but end-use demand fell short of expectations. Wait-and-see sentiment among downstream players gradually intensified, and procurement only maintained a pace of restocking for rigid demand, with none of the transaction momentum typical of the peak season. The market’s earlier bullish expectations for stainless steel prices continued to fade. Futures side, geopolitical conflicts continued to escalate and were unlikely to ease in the short term. Coupled with inflation pressure weakening expectations for US Fed interest rate cuts, uncertainty from a macro perspective kept rising. This week, SS futures remained in the doldrums overall, with no clear directional trend and little ability to lend support to the spot market. Inventory side, stainless steel social inventory dropped back slightly this week, driven by downstream cargo pick-up for rigid demand and active shipments from steel mills, but the absolute level remained high. The overall pace of destocking was slow, and high inventory pressure continued to significantly constrain the market. Supply side, stainless steel mills maintained a high production schedule, and incremental supply pressure continued to mount. Combined with elevated social inventory, shipment pressure on steel mills increased markedly. To stimulate transactions and accelerate inventory turnover, mainstream stainless steel mills had proactively lowered guidance prices for finished products. Cost support weakened significantly. Although tighter nickel ore approval supported relatively strong production costs for ferronickel, stainless steel mills are currently deeply mired in losses and showed extremely low acceptance of high-priced raw materials. Together with steel mills pushing for lower prices in purchases, ferronickel prices halted their gains and pulled back slightly, further weakening cost-side support for finished product prices. Overall, the core contradiction in the stainless steel market this week centered on the mismatch among elevated supply, high inventory, and weakly recovering demand. Strong macro uncertainty continued to weigh on futures, while downstream end-users remained cautious and only maintained just-in-time procurement. Steel mills faced shipment pressure and were also constrained by losses in their raw material procurement pace. On balance, stainless steel finished product prices were expected to remain in the doldrums.