[SMM Stainless Steel Daily Comment] Futures weakened, stainless steel futures pulled back, spot prices held steady, and end-users made just-in-time procurement.

SMM, June 9: SS futures trended lower. Dragged down by overall weakness in nonferrous metals futures, SS futures pulled back in tandem. By midday close, the most-traded SS contract was quoted at 14,420 yuan/mt. In the spot market, despite the decline in SS futures, stainless steel spot prices remained relatively firm, with mainstream quotations showing limited declines, although some low-priced offers emerged. Downstream end-users were cautious in purchasing, mainly buying on a need-to basis at low prices.

The most-traded SS futures contract pulled back. At 10:15 a.m., SS2607 was quoted at 14,470 yuan/mt, down 255 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi stood in the 550-1,200 yuan/mt range. In the spot market, Wuxi cold-rolled 201/2B coil average price fell by 50 yuan/mt; cold-rolled 304/2B coil, Wuxi average price fell 25 yuan/mt, and Foshan average price fell 25 yuan/mt; the price of cold-rolled 316L/2B coil in Wuxi was flat; hot-rolled 316L/NO.1 coil, Wuxi quotations were stable; cold-rolled 430/2B coil prices in both Wuxi and Foshan were stable.

Stainless steel futures and spots experienced heightened volatility. SS futures initially rose then fell, disturbed by macroeconomic news from outside China, and the off-season characteristics of the market became fully evident. The industry's outlook for the future was unclear, with a thick wait-and-see sentiment. Transactions showed sporadic recovery but lacked sustainability. Traders faced rising shipment pressure and mostly offered discounts to boost sales. Overall, the market exhibited a game pattern of macro news disrupting the futures, weakening off-season demand, marginal supply adjustments, and inventory stopping its decline and starting to build up. On the futures side, SS futures were highly volatile, retreating after rapid rise. During the week, the US adjusted import tariffs on some steel, aluminum, and copper, boosting market sentiment and driving the nonferrous sector broadly higher. SS futures surged to 15,175 yuan/mt in tandem. However, subsequent US economic data indicated persistent inflationary pressure, reinforcing expectations for US Fed interest rate hikes, which suppressed commodity markets. Metals futures weakened across the board, and SS futures pulled back accordingly. Recent market movements were dominated by macro news, with weak fundamental support from the industry chain. In terms of spot and inventory, the mid-week futures surge drove spot prices higher for a period, unleashing sentiment of rushing to buy amid continuous price rise and briefly reviving transactions. But the market had already entered the traditional consumption off-season, with overall weak end-user rigid demand. After the futures pulled back, transactions turned sluggish again. Weighed down by poor sales, traders generally cut prices to move goods. On the supply side, some steel mills planned maintenance and production cuts in June, leading to a slight pullback in industry production, which moderately eased supply pressure. However, the magnitude of cuts was limited, and supply pressure was not substantially relieved. Dragged by the weak supply-demand structure, stainless steel social inventory increased slightly this week to 940,400 mt, ending the prior continuous destocking trend. On the cost and raw materials side, overall raw material prices were mediocre. The rise in high-grade NPI slowed, and prices of stainless steel scrap and high-carbon ferrochrome remained basically stable. The raw material side lacked upward momentum, offering limited support for finished steel prices. Currently, steel mills are enjoying sound profitability. Profit margins calculated based on spot raw materials are holding at 2%–3%, while margins based on inventory raw materials are reaching 3.5%–5%. Ample profits are fueling mills’ production enthusiasm, and overall industry production schedules remain elevated. Supported by stable costs and moderate profits, mills have little incentive for voluntary production cuts, with the supply side seeing only marginal adjustments. On the whole, the stainless steel market is being notably swayed by macro disturbances, with futures dominating spot price movements and overall market sentiment staying cautious. Fundamental-wise, the off-season demand downtrend is clear, and sluggish end-user transactions represent the core bearish factor. Although mill maintenance is bringing a slight supply contraction, high profits are sustaining elevated production schedules, disrupting the weak supply-demand balance and causing inventories to edge up. The raw material side is providing flimsy support and cannot offset demand-side pressure; supply-demand mismatch risks persist, and prices are under broad pressure. Going forward, the focus will be on US Fed policy expectations, SS futures fluctuations, downstream off-season rigid demand changes, and the progress of mill maintenance implementation.