[SMM Stainless Steel Daily Review] SS futures fell and pulled back, stainless steel spot transactions weakened and quoted prices held steady.

According to SMM on July 24, SS futures showed an overall pattern of declining and pulling back. Non-ferrous metals futures pulled back collectively, with SHFE nickel and SS weakening and pulling back in sync. As of the close, the most-traded SS contract closed at 14,770 yuan/mt. At the spot market level, affected by both the weakening of SS futures and the concentrated release of demand in the previous period, market inquiry activity declined somewhat, overall transactions weakened, and purchases were mainly for essential needs. However, with steel mills' guidance prices remaining stable and spot prices having not followed the futures rally previously, spot quotations currently remain mainly stable.

SS most-traded futures contract. At 10:15 a.m., SS2609 traded at 14,690 yuan/mt, down 155 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi were in the range of 330-730 yuan/mt. In the spot market, the average price of cold-rolled 201/2B coil in Wuxi was flat; for cold-rolled raw edge 304/2B coil, the average price was flat in Wuxi and flat in Foshan; cold-rolled 316L/2B coil in Wuxi fell by 75 yuan/mt; hot-rolled 316L/NO.1 coil quotation in Wuxi fell by 50 yuan/mt; and cold-rolled 430/2B coil in both Wuxi and Foshan was flat.

This week, macro and industrial positive factors resonated, supporting nickel and stainless steel futures to maintain a pattern of consolidating on a strong note. On the macro side, US inflation expectations pulled back, while the US-Iran geopolitical conflict continued to disturb market risk sentiment. On the industrial side, earlier expectations of limited growth in supplementary quotas for Indonesian RKAB nickel ores continued to ferment, effectively stabilizing the bottom of nickel prices and driving SHFE nickel to consolidate on a strong note, with SS futures following the trajectory of nickel prices to hold up well. In terms of spot and inventory, this week, SS futures consolidated on a strong note, restoring market confidence and driving concentrated release of spot transactions early in the week. Low-priced cargoes were relatively steady in meeting essential demand, ensuring basic transaction resilience. But the market remains in the traditional consumption off-season, with overall effective demand from downstream end-users limited, insufficient support from industry rigid demand, and weak acceptance of high-priced cargoes. This led to insufficient momentum for spot price increases, with price gains significantly lagging behind futures. Spot prices fluctuated within a range throughout the week, with limited changes. On the inventory side, logic significantly weakened. The impact of typhoon weather that previously restricted arrivals faded, with previously delayed off-site cargoes arriving at ports and entering warehouses in a concentrated manner. Coupled with steel mills' continuous normal distribution and ample market supply, against a backdrop of end-use demand struggling to effectively absorb incremental cargoes, stainless steel social inventory saw a slight buildup this week, with marginal inventory pressure emerging in the off-season. On the cost and profit side, the tug-of-war between longs and shorts in raw materials intensified this week, with the price spread between finished steel and raw materials basically stable, and steel mills' smelting profits generally remained stable. Throughout the week, stainless steel mills maintained their desire to bargain down raw material prices, with cautious purchasing attitudes, and overall raw material transactions on the floor were weak. Under the pressure from steel mills' persistent push for lower prices and sluggish just-in-time procurement, NPI prices remained stable overall without notable fluctuations; stainless steel scrap followed the strong trend in finished steel futures with a slight increase. This week, smelting margins at stainless steel mills held largely stable, and the industry’s profitability showed no significant change. Overall, this week the stainless steel market exhibited a tug-of-war pattern characterized by macro support underpinning futures, the off-season constraining spot markets, some inventory buildup, and steady profit trends. Macro sentiment and expectations of tightening nickel supply supported futures to consolidate on a strong note, with the recovery in futures helping to mend market transactions; however, weak off-season just-in-time demand and insufficient acceptance of high prices continued to cap the upside room for spot prices. Improved weather led to concentrated cargo arrivals, which, combined with normal allocations from steel mills, drove a slight inventory accumulation. On the raw material side, the tug-of-war between longs and shorts was balanced; the price spread between finished steel and raw materials remained stable, keeping steel mill profits steady. In the short term, the market is expected to continue the structural pattern of strong futures and mild fluctuations in spot prices. Going forward, key areas to monitor include changes in macro sentiment, SHFE nickel futures trends, the strength of downstream just-in-time demand release during the off-season, the pace of inventory buildup, and the tug-of-war in raw material procurement.