[SMM Stainless Steel Daily Review] Strengthening Nonferrous Metals Sector Drives SS Futures to Stop Falling and Rebound, While Weak Spot Stainless Steel Inquiries Limit Upward Momentum

According to SMM on August 7, SS futures overall showed a trend of stopping falling and rebounding. On that day, the nonferrous metals sector strengthened collectively, pushing SS prices higher in tandem. As of the midday close, the most-traded SS futures contract settled at 14,640 yuan/mt. In the spot market, although SS futures had already shown a clear signal of stopping falling and rebounding, mid-week prices were at elevated levels and downstream purchase demand had largely been released. Intraday market purchase inquiries remained relatively weak, and traders' spot price upward momentum was very limited.

The most-traded SS futures contract. At 10:15 am, the SS2609 contract was at 14,570 yuan/mt, up 105 yuan/mt from the previous trading day. For the Wuxi area, 304/2B spot premiums were in the range of 400-750 yuan/mt. In the spot market, the average price of cold-rolled 201/2B coils in Wuxi remained stable; for undressed edge cold-rolled 304/2B coils, the Wuxi average price fell by 75 yuan/mt and the Foshan average price fell by 50 yuan/mt; the price of cold-rolled 316L/2B coils in Wuxi was unchanged; the quotation for hot-rolled 316L/NO.1 coils in Wuxi was flat; cold-rolled 430/2B coils in both Wuxi and Foshan were flat.

This week, stainless steel futures were subject to double disturbances from industry news and fund flows, showing an overall pattern of wild swings with an intense tug-of-war between longs and shorts. During the week, news of Indonesia's RKAB nickel ore supplementary quotas repeatedly disrupted market expectations. Combined with shifting capital flows in futures, SS futures initially rose then fell, touching the 15,100 yuan/mt level at one point mid-week. However, as expectations of incremental nickel ore quotas heated up, bulls' confidence faded, and futures again pulled back into a subdued trend, with large overall fluctuations and market sentiment switching back and forth. The spot market showed a pattern of weak futures-spot linkage and a broadly balanced supply-demand situation. Prices overall moved sideways, making it difficult to either rise or fall. The market remained in the traditional consumption off-season, and sustained high summer temperatures continued to weigh on downstream processing and construction pace, with end-user rigid demand releasing sluggishly and overall market confidence insufficient. During the week, only when futures strengthened did spot transactions temporarily warm up. After futures pulled back, downstream purchase willingness quickly cooled, market transactions weakened again, and end-user cautious wait-and-see sentiment continued to intensify. However, spot prices did not follow the sharp weakening of futures, as key supportive factors were ample: first, NPI raw material prices were firm, providing relatively strong cost support for stainless steel production; second, mainstream steel mills held prices firm strongly, stabilizing the spot price center from the factory side; third, current stainless steel social inventory was at a reasonably appropriate level, destocking pressure was not significant, and supply and demand remained basically in balance. Overall, the stainless steel market this week exhibited a divergent pattern in which futures consolidated on a subdued note while spot prices held steady and resisted declines. In the short term, weak off-season demand and sluggish end-user purchases were the core bearish factors constraining price rises. Additionally, stainless steel production had already increased to some extent in August, gradually increasing destocking pressure on market supply, leaving upward price momentum insufficient. However, in the medium and long term, expectations of the approaching peak season are gradually warming up, coupled with strong cost support and low inventory pressure. Overall market expectations are positive, and the downside room for prices is also limited. Subsequently, the market will likely continue to move sideways, with focus on the progress of Indonesia nickel ore quota approvals, the fluctuation pace of SS futures, the recovery of downstream off-season rigid demand, and steel mill production dynamics.