[SMM Stainless Steel Daily Review] SS Futures Consolidate on a Subdued Note, Stainless Steel Spot Steady; Off-Season and Typhoon Keep Transactions Sluggish

According to SMM on August 10, SS futures pulled back slightly. The night session on Friday saw SS walk back somewhat, but after Monday's opening, it largely consolidated on a stable note. By the close, the most-traded SS contract settled at 14,615 yuan/mt. In the spot market, the fluctuation range of SS futures was limited, and traders' spot quotes were largely stable. However, with the market still in the demand off-season and impacted by typhoon weather, transactions remained sluggish.

SS most-traded futures contract. At 10:15 a.m., SS2610 traded at 14,655 yuan/mt, up 85 yuan/mt from the previous trading day. Spot premiums for 304/2B in the Wuxi area were in the range of 315-665 yuan/mt. In the spot market, the average price of cold-rolled 201/2B coils in Wuxi was stable; for cold-rolled raw edge 304/2B coils, the average price in Wuxi was flat, and Foshan's average price was flat; the price of cold-rolled 316L/2B coils in Wuxi was flat; for hot-rolled 316L/NO.1 coils, Wuxi's quotes were flat; and cold-rolled 430/2B coils in both Wuxi and Foshan were flat.

This week, stainless steel futures were disturbed by both industry news and capital flows, showing an overall consolidation pattern with wild swings and a fierce tug-of-war between longs and shorts. During the week, news on Indonesia's RKAB additional nickel ore quotas repeatedly disrupted market expectations, coupled with shifts in capital flows on the futures, SS futures rose first and then fell. Mid-week, prices briefly probed the 15,100 yuan/mt level, but as expectations for growth in nickel ore quotas heated up, confidence among bulls faded, and futures pulled back into the doldrums. Overall, the fluctuation range was relatively large, and market trading sentiment alternated. The spot market showed a pattern of futures-spot linkage tilting weak and a basically balanced supply-demand dynamic, with prices moving sideways overall and facing difficulties in either rising or falling. The market remained in the traditional consumption off-season, and persistently high summer temperatures continued to suppress downstream processing and the construction pace, leading to sluggish release of end-user rigid demand and overall weak market confidence. During the week, only when futures strengthened did spot transactions see a phase of recovery; once futures pulled back, downstream purchase willingness rapidly cooled, in-plant transactions turned weak again, and the cautious wait-and-see sentiment among end-users continued to intensify. However, spot prices did not follow the large decline in futures, supported by ample core factors: first, NPI, a nickel-based raw material, saw firm price performance, providing strong support to stainless steel production costs; second, mainstream steel mills showed a strong willingness to hold prices firm, stabilizing the spot price center from the factory level; third, the current social inventory of stainless steel was in a relatively reasonable range, with relatively small destocking pressure, and supply and demand largely in balance. Overall, the stainless steel market this week showed a diverging pattern where futures consolidated on a subdued note, while spot prices remained stable and resistant to declines. In the short term, weak off-season demand and lackluster end-user procurement are the core bearish factors capping price increases. Coupled with an increase in stainless steel production in August, the pressure to destock market supply is gradually increasing, leaving insufficient momentum for prices to rise. But in the medium and long term, expectations for the upcoming peak season are gradually heating 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 is highly likely to move sideways, with a focus on tracking the progress of Indonesian nickel ore quota implementation, the pace of fluctuations in SS futures, the recovery of downstream rigid demand during the off-season, and steel mill production dynamics.