[SMM Stainless Steel Daily Review] SS fell below the 14,000 mark, downstream demand was sluggish, and both stainless steel futures and spot prices weakened.

According to SMM on August 27, SS futures declined further. The recent safety accident had limited impact on the market, and SS continued its previous downtrend. Intraday movement remained weak, with prices dipping below the key level of 14,000 yuan/mt during the session. By close, the most-traded SS futures contract settled at 14,225 yuan/mt. In the spot market, dragged by the weak SS futures and sluggish end-use demand, market expectations for a recovery ahead of the September peak season were completely dashed, leaving stainless steel spot prices in the doldrums.

The Most-Traded SS Futures Contract. At 10:15 a.m., SS2610 was at 14,070 yuan/mt, down 200 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi were in the range of 500-800 yuan/mt. In the spot market, the average price of cold-rolled 201/2B coil in Wuxi was flat; cold-rolled edged 304/2B coil: the average price in Wuxi fell 50 yuan/mt, and in Foshan fell 25 yuan/mt; cold-rolled 316L/2B coil prices in Wuxi were flat; hot-rolled 316L/NO.1 coil quotes in Wuxi were flat; cold-rolled 430/2B coil was flat in both Wuxi and Foshan.

This week, stainless steel futures overall consolidated at lows. Earlier, the SS futures market was hit by news of increased nickel ore quotas from Indonesia’s RKAB, causing a sharp decline and pushing the overall market valuation to a relatively low range. This week, supported by a broad recovery in nonferrous metals, futures staged a phase of repair rebound. However, the earlier bearish sentiment did not fully dissipate, and the rebound was weak, leaving futures still consolidating at lows with insufficient restoration of bullish confidence. The spot market followed the weak futures, with the price center edging lower, as the pre-peak season warm-up fell short of expectations and the supply-demand imbalance remained prominent. The market is now approaching the traditional “September-October peak season,” but sentiment for end-user stockpiling in advance was sluggish, downstream demand did not show a substantial recovery, and spot transactions remained weak, mainly driven by just-in-time procurement and sporadic bursts of buying, lacking sustained restocking support. Affected by futures trading at low levels, market pessimism persisted, and with steel mills’ willingness to hold prices firm showing signs of wavering, spot quotes declined accordingly, pushing the price center further down. Supply-side pressure intensified further. Steel mill production schedules in August rose MoM, and capacity release accelerated. Against the backdrop of persistently weak end-use demand, destocking pressure on market inventories continued to amplify, driving a further increase in stainless steel social inventories this week. The inventory buildup trend persisted, highlighting the supply-demand imbalance at the tail end of the off-season. The cost and profit side provided bottom support, effectively limiting the room for a sharp decline in spot prices. This week, prices of stainless steel products and raw materials fell in tandem, but the decline in product prices was significantly larger than that of raw materials, causing the price spread to narrow further. Steel mill smelting profits were squeezed further, and the industry is now approaching the edge of losses. Cost-side support gradually strengthened, forming a hard floor for spot prices and limiting their downside room, while the market exhibited characteristics of resisting decline on a weak note. Overall, this week, the stainless steel market presented a game scenario of weak repair in low-level futures, spot prices weakening with the futures, sluggish pre-season demand, supply growth pushing up inventory, and costs nearing losses to underpin prices. In the short term, the lack of pre-season demand, rebound in steel mill production schedules, and continued inventory buildup constituted the core bearish factors, making the overall weak operation pattern of prices difficult to change. However, risks of cost losses emerged, bottom support continued to strengthen, and the downside room for sharp declines was relatively limited, with the market likely maintaining a consolidation pattern on a weak note. Key tracking thereafter includes the sustainability of SS futures repair, the pace of downstream peak season advance stockpiling, changes in steel mill production schedules, movements in price spreads between raw materials and finished products, and the progress of inventory buildup.