[SMM Stainless Steel Daily Review] SS Futures Fell and Pulled Back, Stainless Steel Offers Pulled Back, Market Trading Was Sluggish

SMM reported on August 13 that SS futures overall trended lower and pulled back, dragged down by broad weakness in nonferrous metals, with SS falling in tandem. As of the close, the most-traded SS contract settled at 14,385 yuan/mt. In the spot market, 304 stainless steel offers declined and pulled back, dragged down by the pullback in SS futures and a lower guidance price at a mainstream stainless steel mill. However, the price pullback fueled pessimistic market sentiment; downstream purchases were cautious, and inquiries and transactions during the day were subdued.

SS Futures Most-Traded Contract. At 10:15 a.m., SS2610 traded at 14,395 yuan/mt, down 160 yuan/mt from the previous trading day. Wuxi 304/2B spot premiums were in the 475-675 yuan/mt range. In the spot market, the average price of Wuxi cold-rolled 201/2B coil was unchanged; for cold-rolled raw-edge 304/2B coil, the Wuxi average price fell by 125 yuan/mt and the Foshan average by 175 yuan/mt; Wuxi cold-rolled 316L/2B coil prices were flat; for hot-rolled 316L/NO.1 coil, Wuxi offers were flat; cold-rolled 430/2B coil in both Wuxi and Foshan was unchanged.

This week, stainless steel futures were disrupted by both 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 about Indonesia's RKAB nickel ore supplementary quotas repeatedly disrupted market expectations; combined with shifting fund flows in futures, SS futures rose first and then fell. Mid-week, they briefly tested the 15,100 yuan/mt level, but as expectations for additional nickel ore quotas heated up, bulls' confidence faded and the futures again fell back into a subdued trend. Overall volatility was large, and market trading sentiment shifted repeatedly. The spot market showed a pattern of weak futures-spot linkage and basically balanced supply and demand. Prices overall moved sideways, with little room to either rise or fall. The market is still in the traditional consumption off-season; combined with hot summer weather continuing to suppress downstream processing and construction activity, end-user rigid demand has been sluggish, and overall market confidence is insufficient. During the week, only when futures strengthened did spot transactions stage a temporary recovery. After futures pulled back, downstream purchase willingness cooled quickly, transactions weakened again, and cautious wait-and-see sentiment among end users continued to deepen. However, spot prices did not follow futures sharply lower, and core supporting factors were sufficient: first, nickel-based raw material NPI prices held firm, providing relatively strong support for stainless steel production costs; second, mainstream steel mills showed strong willingness to hold prices firm, stabilizing the spot price center from the mill side; third, stainless steel social inventory is in a relatively reasonable range, with limited destocking pressure, leaving supply and demand basically balanced. Overall, this week's stainless steel market showed 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 purchasing are the core bearish factors constraining price increases. Combined with higher stainless steel production in August, destocking pressure on market supply is gradually increasing, 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.