According to SMM on September 10, SS futures consolidated, and driven by the strength of SHFE nickel, SS successfully stopped falling. By the close, the most-traded SS contract settled at 13,765 yuan/mt. In the spot market, SS futures consolidated at lows. Against the backdrop of an overall weak market, downstream end-use demand showed little sign of recovery, and traders continued to hold quotes steady at low levels. Current prices have approached the low levels seen at the start of the year. Coupled with stainless steel mills already incurring losses, production schedules have declined somewhat. Although market expectations are unlikely to reverse the overall weakness, the likelihood of further sharp declines in the short term is also relatively low.
SS futures most-traded contract. At 10:15 a.m., SS2610 was quoted at 13,860 yuan/mt, up 145 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi were in the range of 460-710 yuan/mt. In the spot market, the average price of Wuxi cold-rolled 201/2B coil remained flat; for cold-rolled 304/2B coil with mill edges, the average price in Wuxi remained flat, and the average price in Foshan remained flat; the price of cold-rolled 316L/2B coil in Wuxi remained flat; for hot-rolled 316L/NO.1 coil, quotes in Wuxi remained flat; cold-rolled 430/2B coil in both Wuxi and Foshan remained flat.
This week, stainless steel futures extended their weak trend overall and broke down further. The traditional "September peak season" consumption period officially began, but expectations for demand recovery fell through. Market sentiment turned pessimistic and bearish, SS futures came under pressure and weakened, with the weekly low briefly dipping below 13,700 yuan/mt. The market valuation center continued to pull back, and bearish sentiment dominated. The spot market weakened in tandem with futures. The pre-peak-season rally was absent, and the supply-demand imbalance intensified further. The market has now entered the traditional peak-season consumption window, but downstream end-users have not shown concentrated stockpiling activity. Rigid demand remained persistently weak, and overall market trading was sluggish. On the inventory side, a structural divergence emerged. This week, futures consolidated at low levels, and warrant inventory steadily pulled back, driving a slight decline in stainless steel social inventory. However, fundamental pressure has not materially eased. Steel mill production schedule cuts were limited, overall capacity remained at high levels of output, and with end-use rigid demand persistently absent, destocking efficiency remained low. Overall industry inventory pressure stayed elevated, and the supply-demand surplus persisted. Cost and profit pressures became fully evident, and a loss-making pattern took hold at steel mills. This week, stainless steel product prices and raw material prices pulled back in tandem, but product prices, dragged down by futures, fell more than raw material prices. The industry formally entered a loss-making range, and steel mill smelting margins contracted. Under profit pressure, steel mills' desire to bargain down prices for nickel-bearing raw materials continued to strengthen, exerting reverse pressure on raw material price trends and forming a negative feedback loop of "falling product prices, losses, and raw material price suppression." Overall, this week's stainless steel market exhibited a weak game pattern characterized by dashed peak-season expectations, sluggish end-use rigid demand, futures breaking down, spot prices following declines, divergent inventory structures, and steel mill losses. In the short term, the failure of peak-season demand to recover, spreading market pessimism, high production schedules at steel mills, and bear dominance in futures constitute the core bearish factors, keeping the market weak. Going forward, focus on the pace of SS futures stopping falling and repairing, the realization of downstream peak-season rigid demand and stockpiling progress, adjustments to steel mill production schedules, changes in raw material and finished product price spreads, and the pace of inventory destocking.
