[SMM Stainless Steel Daily Review] SS futures consolidated on a strong note, spot stainless steel remained stable with off-season rigid demand transactions.

According to SMM on August 12, SS futures displayed a consolidation on a strong note, though gains were relatively limited. As of the close, the most-traded SS contract settled at 14,535 yuan/mt. In the spot market, despite a slight rise in SS futures, spot offers did not show significant fluctuations, with the overall focus on holding offers steady and actively selling. Market inquiry activity recovered somewhat, but against the backdrop of the demand off-season, actual transactions remained primarily rigid demand-driven.

The most-traded SS futures contract. At 10:15 a.m., SS2610 was at 14,555 yuan/mt, up 35 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi were in the range of 315-765 yuan/mt. In the spot market, the average price of cold-rolled 201/2B coil in Wuxi held steady; for cold-rolled mill edge 304/2B coil, average prices in Wuxi and Foshan were flat; cold-rolled 316L/2B coil price in Wuxi was flat; hot-rolled 316L/NO.1 coil quotation in Wuxi was flat; and cold-rolled 430/2B coil in both Wuxi and Foshan was unchanged.

This week, stainless steel futures were disrupted by both industry news and capital flows, showing a pattern of wild swings with intense tug-of-war between longs and shorts. During the week, news of Indonesia’s RKAB supplementary nickel ore quotas repeatedly roiled market expectations. Combined with shifts in capital flows on futures, SS futures rose initially before falling. In mid-week, it briefly tested the 15,100 yuan/mt mark, but as expectations of increased nickel ore quotas heated up, bulls' confidence evaporated, and futures fell back into a weaker trend. Overall volatility was large, and market trading sentiment experienced repeated switches. The spot market showed a pattern of weak futures-spot correlation and basically balanced supply-demand, with prices staying rangebound overall and finding it difficult to move either up or down. The market is still in the traditional consumption off-season, and high summer temperatures continue to suppress downstream processing and construction paces, 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 phased recovery; after the futures fell back, downstream purchase willingness quickly cooled, and transactions weakened again, with end-users' cautious wait-and-see sentiment intensifying. However, spot prices did not decline sharply along with futures, as key supporting factors were sufficient: first, firm nickel-based raw material NPI prices provided strong support for stainless steel production costs; second, mainstream steel mills showed a strong intention to hold prices firm, stabilizing the spot price center from the mill side; third, current stainless steel social inventory is at a relatively reasonable level, with modest destocking pressure and supply-demand largely balanced. Overall, this week's stainless steel market presented a divergent pattern: futures consolidated on a subdued note, while spot prices held firm against declines. In the short term, weak off-season demand and sluggish end-user purchases are the core bearish factors restraining price increases. Coupled with an increase in stainless steel production in August, the destocking pressure on market supply is gradually rising, and upward price momentum is insufficient. 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.