[SMM Stainless Steel Daily Review] Macro Uncertainty Coupled With Rigid Demand Support, Stainless Steel Futures and Spot Maintain a Fluctuating Trend

SMM reported on March 30 that SS futures showed a fluctuating trend. Macro news disruptions persisted, leaving the market without a clear direction and making it difficult to change the fluctuating pattern in futures, which closed at 14,360 yuan/mt as of the midday close. Spot market, spot stainless steel transactions were mostly driven by just-in-time procurement, with limited fluctuations in market quotations, and traders generally adopted a strategy of holding prices steady while making shipments. Although current stainless steel prices still had some cost support, strong wait-and-see sentiment prevailed in the market due to macro uncertainty disruptions; to avoid price fluctuations, downstream players mostly made just-in-time procurement. Although the peak-season just-in-time demand base remained solid, fundamental factors such as short-term supply and demand and costs still found it difficult to dominate the price trend of stainless steel.

The most-traded SS futures contract fluctuated. At 10:15 a.m., SS2605 stood at 14,365 yuan/mt, up 10 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi were in the range of 105-305 yuan/mt. In the spot market, the average price of cold-rolled 201/2B coils in Wuxi was flat; for cold-rolled burr-edge 304/2B coils, the average price in Wuxi fell by 50 yuan/mt, while the average price in Foshan was steady; cold-rolled 316L/2B coils in Wuxi were flat; for hot-rolled 316L/NO.1 coils, Wuxi quotations were unchanged; cold-rolled 430/2B coils in both Wuxi and Foshan were also steady.

The stainless steel market has now entered the traditional peak consumption season. Downstream end-user transactions remained stable, but market sentiment turned cautious, and end-user enterprises lacked willingness to stockpile, with purchases mainly driven by restocking as needed. The brisk trading pattern typically seen in the peak season had not emerged, and overall demand remained stable and neutral. Futures, repeated disruptions from the Iran geopolitical conflict made it difficult for its short-term impact on SS futures to be fully eliminated. However, supported by recent expectations that the conflict may ease, together with stimulus from news related to Indonesia's export tariffs and windfall tax on nickel products, SS futures held up well this week, but still failed to break out of the previous fluctuating range, with no clear breakout direction in the market. Supply and inventory side, stainless steel mills still maintained relatively high production schedules in the short term, and the high supply pattern remained unchanged. Coupled with relatively high recent arrivals, although downstream transactions remained stable, end-users lacked willingness to stockpile, and stainless steel social inventory posted another slight inventory buildup this week. Market inventory digestion pressure remained relatively high, which both constrained the market to some extent and tested the pace of steel mill shipments. Cost side, recent gains in SHFE nickel prices pushed high-grade NPI quotations somewhat higher, but stainless steel mills themselves faced significant cost pressure, and the economic advantage of stainless steel scrap became more prominent. Steel mills showed low acceptance of high-priced NPI, and overall purchasing sentiment remained cautious. Therefore, stainless steel production costs generally remained stable, without obvious fluctuations. Overall, the core contradiction in the stainless steel market this week lay in the mismatch among elevated supply, relatively high inventory, and steady demand. Although the cost side provided some support, it was difficult to generate sufficient momentum to drive finished steel prices higher; coupled with the continued strong uncertainty in the macro news environment, overall market sentiment remained cautious, and stainless steel prices were expected to remain dominated by sideways movement in the short term.