[SMM Stainless Steel Daily Review] SS Futures Fell and Pulled Back, Spot Market Came Under Pressure

SMM News on April 2: SS futures fell back after declining. US ADP employment data showed elevated inflation, while geopolitical conflicts still showed no clear signs of easing in the short term. SS futures came under pressure and moved lower at the open, closing at 14,110 yuan/mt by the midday session. In the spot market, affected by the continued decline in futures, confidence in the spot market was clearly hit. Wait-and-see sentiment among downstream end-users intensified, and inquiry and transaction activity weakened further. Meanwhile, with increased arrivals from steel mills at month-end and an inventory buildup in stainless steel social inventory, some traders showed stronger willingness to sell and slightly lowered quotations in an attempt to stimulate transactions.

The most-traded SS futures contract remained in the doldrums. As of 10:15 a.m., SS2605 was quoted at 14,110 yuan/mt, down 165 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi were in the range of 310-510 yuan/mt. In the spot market, the average price of cold-rolled 201/2B coils in Wuxi was unchanged; for cold-rolled burr-edge 304/2B coils, the average price in Wuxi fell by 50 yuan/mt, while the average price in Foshan held steady; cold-rolled 316L/2B coils in Wuxi were unchanged; 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. Downstream end-user transactions remained stable, but market sentiment turned cautious. End-user enterprises lacked willingness to stockpile, and procurement was mainly driven by restocking based on immediate needs, without showing the brisk transaction pattern typically seen in the peak season. Overall demand performance was stable and neutral. Futures side, repeated disruptions from the Iran geopolitical conflict made it difficult for the impact on SS futures to be fully eliminated in the short term. However, supported recently by expectations that the conflict may ease, coupled with stimulus from news related to Indonesia's export tariffs and windfall tax on nickel products, SS futures showed a fluctuating but relatively firm trend this week, though they still failed to break out of the previous trading range, leaving the market without 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. In addition, with relatively high recent arrivals, although downstream transactions remained stable, end-users lacked willingness to stockpile. As a result, stainless steel social inventory posted another slight inventory buildup this week, and pressure to digest market inventory remained substantial. This not only imposed certain constraints on the market, but also 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 their overall procurement attitude remained cautious. Therefore, stainless steel production costs generally stayed stable, without obvious fluctuations. Overall, the core contradiction in the stainless steel market this week lay in the mismatch among high supply, elevated inventory, and stable demand. Although there was some support on the cost side, it was difficult to provide sufficient momentum to drive finished steel prices higher; coupled with the still strong uncertainty in macro news, overall market sentiment remained cautious, and stainless steel prices were expected to continue moving sideways in the short term.