[SMM Stainless Steel Daily Review] SS futures price drifts higher, spot stainless steel transactions remain sluggish.

According to SMM on June 29, SS futures held up well. Nonferrous metals futures performed strongly overall, and SS futures also rose. By the close, the most-traded SS contract settled at 14,770 yuan/mt. In the spot market, despite some recovery in SS futures, cautious wait-and-see sentiment among downstream users remained strong amid recent market fluctuations. Coupled with already weak demand in the consumption off-season, spot prices mostly held stable, and trading remained sluggish and difficult to improve.

The most-traded SS futures contract. At 10:15 a.m., SS2608 was at 14,715 yuan/mt, up 45 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi were in the 355–855 yuan/mt range. In the spot market, the average price of cold-rolled 201/2B coil in Wuxi was flat; cold-rolled 304/2B coil with mill edge, the average price in Wuxi was flat and in Foshan was flat; cold-rolled 316L/2B coil prices in Wuxi were flat; hot-rolled 316L/NO.1 coil quoted in Wuxi was flat; cold-rolled 430/2B coil in both Wuxi and Foshan were flat.

This week, stainless steel futures and spot markets consolidated with a weaker bias. Overseas macro headwinds combined with industry sentiment disruptions sent market pessimism higher, fully exposing the off-season fundamentals. The overall pattern featured macro pressure on futures, weakening off-season demand, traders cutting prices to reduce inventory, supply contraction supporting inventory, and shrinking steel mill profits. Futures were dragged lower by monetary policy and raw material rumors, while spot held firm on steel mill price-supporting efforts showing resilience, but end-user trading was sluggish, leaving the overall market bearish. On the futures side, macro headwinds dominated moves this week. The easing US-Iran conflict slightly boosted risk appetite, but the US Fed’s hawkish stance lifted rate hike expectations, weighing on the valuation of the entire nonferrous complex. Mid-week, rumors of expanded Indonesian nickel ore quotas surfaced; although officials later denied them, market pessimism had already spread, triggering capital flight from risk and dragging SS futures to drift lower. In terms of spot and inventory, this week saw clear divergence between futures and spot, with spot showing stronger resilience than futures. Mainstream steel mills held a strong willingness to hold prices firm, effectively defending the price floor. However, the market entered the traditional consumption off-season, end-user rigid demand continued to weaken, and the falling futures further undermined market confidence, leaving end-users with strong wait-and-see sentiment and sluggish in-market trading. Traders were strongly motivated to reduce inventory, leading to frequent low-priced offers. Meanwhile, steel mill maintenance and production cuts materialized, marginally shrinking supply and cushioning off-season demand pressure, keeping total social inventory broadly stable with no significant fluctuations this week. On the cost and profit side, finished steel and raw materials diverged this week, with steel mill profits continuously squeezed. Stainless steel spot prices pulled back alongside futures, shifting the price center lower. But high-grade NPI supply tightness is expected to persist, keeping prices relatively resilient with limited declines, while raw material costs remained rigid. The combination of declining finished steel prices and firm costs directly compressed smelting profits, further intensifying overall industry profitability pressure. Overall, the market was dominated by macro headwinds this week, as weak off-season rigid demand served as the core fundamental pressure. Steel mills held prices firm and supply contraction supported spot cargo and inventory, but failed to reverse the weak market trend. The rigid cost of high-grade NPI continued to pressure steel mill profits. In the short term, futures were still disrupted by US Fed policies and Indonesia nickel news, and the weak supply-demand pattern in the off-season was hard to change. Going forward, the key focus should be on tracking rate-hike expectations, SS futures fluctuations, downstream rigid demand, steel mill maintenance progress, and price trends of nickel raw materials.