[SMM Stainless Steel Daily Review] SS Futures Move Sideways, with Cost Support Keeping Spot Stainless Steel Stable

SMM reported on April 1 that SS futures moved sideways. Stainless steel futures rose first and then fell, with a relatively small intraday change, closing at 14,180 yuan/mt as of the midday close. Spot market, SS futures moved sideways, while prices of various furnace charge materials remained relatively firm, supporting stainless steel prices. Market quotations were largely stable, with limited room to rise or fall. Although downstream end-users mainly made just-in-time procurement, current market inventory pressure was not high, and prices were still expected to remain largely stable in the short term.

The most-traded SS futures contract moved sideways. At 10:15 a.m., SS2605 was quoted at 14,275 yuan/mt, up 75 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi were in the range of 195-395 yuan/mt. In the spot market, the average price of cold-rolled 201/2B coils in Wuxi was flat; for cold-rolled trimmed 304/2B coils, the average prices in both Wuxi and Foshan were stable; cold-rolled 316L/2B coils in Wuxi were flat; hot-rolled 316L/NO.1 coils in Wuxi were quoted flat; and cold-rolled 430/2B coils in both Wuxi and Foshan were stable.

The stainless steel market has now entered the traditional peak consumption season. Transactions among downstream end-users remained steady, but market sentiment turned cautious. End-user enterprises lacked willingness to stockpile, and procurement was mainly driven by restocking based on demand. The brisk trading pattern typically seen in the peak season has not emerged, and overall demand remained steady and neutral. Futures, repeated disruptions from the Iran geopolitical conflict made its short-term impact on SS futures difficult to fully eliminate. However, supported by expectations that the conflict may ease, coupled with stimulus from news related to Indonesian export tariffs and windfall taxes on nickel products, SS futures held up well this week. Still, they have not broken out of the sideways range formed earlier, and the market lacks a clear breakout direction. 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 steady, 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 up quotations for high-grade NPI, 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 maintained an overall cautious procurement stance. Therefore, stainless steel production costs remained largely stable overall, with no significant fluctuations. Overall, the core contradiction in the stainless steel market this week lay in the mismatch among high supply, elevated inventory, and steady demand. Although the cost side provided some support, it was difficult to offer sufficient momentum to drive finished steel prices higher. In addition, macro news uncertainty remained strong, and overall market sentiment stayed cautious. Stainless steel prices are expected to continue to move sideways in the short term.