[SMM Stainless Steel Daily Review] SS futures stop falling and recover, steel mills hold prices firm amid weak demand suppressing stainless steel spot prices

According to SMM on September 15, SS futures stopped falling and rebounded. Although prices briefly dipped to 13,460 yuan/mt during the session, they recovered and rallied near the close. By the end of trading, the most-traded SS contract settled at 13,560 yuan/mt. In the spot market, although SS futures stopped falling and rebounded, spot prices at steel mills still showed an inverted price spread. News circulated that steel mills held meetings to discuss production cuts, and combined with tight supply and price-restricted sales at some mills, spot prices remained basically stable. Downstream, however, remained cautious and on the sidelines due to weak demand, and spot market transactions continued to be sluggish.

The most-traded SS futures contract. At 10:15 a.m., SS2610 was quoted at 13,505 yuan/mt, down 20 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi were in the range of 665-1,065 yuan/mt. In the spot market, the average price of cold-rolled 201/2B coils in Wuxi was flat; for cold-rolled raw-edge 304/2B coils, the average price in Wuxi was flat, and the average price in Foshan was flat; 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 coils in both Wuxi and Foshan were flat.

This week, stainless steel futures overall extended a low-level, subdued consolidation pattern. Disappointing peak-season expectations dominated futures sentiment, and bearish sentiment in the market continued to build. The long-awaited end-user recovery failed to materialize, and market expectations for a rebound were thoroughly dashed. Pessimistic sentiment was released in a concentrated manner, dragging SS futures to keep hitting bottom. Prices once dipped to 13,680 yuan/mt during the week, marking a new stage low since February this year. The operating center of futures continued to shift downward, and the overall pattern remained in the doldrums. The spot market weakened in tandem with futures. With peak-season rigid demand absent, market trading sentiment remained persistently sluggish. Downstream end-users showed no concentrated stockpiling activity, maintaining a just-in-time procurement model, and inventory destocking efficiency remained low. Weighed down by persistently weak futures and demand falling short of expectations, stainless steel mills' resolve to hold prices firm continued to loosen, and market guidance prices and trader agency quotes were lowered successively. At this stage, the market is primarily driven by traders actively selling to reduce inventory, with purchasing willingness generally weak. End-user buying remains cautious and wait-and-see, with inquiries and transactions in the market staying subdued. The spot market shows pronounced weakness. On the inventory side, the market is in a stable inventory pattern under weak supply and demand. Although steel mills have lowered subsequent production schedules and marginal supply growth pressure has eased, end-user rigid demand remains persistently weak, and the supply-demand mismatch persists. This week, stainless steel social inventory showed no significant fluctuations and remained basically stable overall. On the cost and profit side, the market remains under pressure, and steel mill losses have not improved materially. This week, stainless steel finished product and raw material prices pulled back in tandem. The breakdown in finished product futures dragged spot prices lower, and raw material prices followed suit with adjustments. Although the decline in finished steel prices was relatively contained this week, and steel mills’ earlier losses did not widen further, the industry’s overall loss-making situation has not been reversed. Pressure on production profitability persists, and the cost side can only provide weak bottom support, making it difficult to drive a recovery in futures and spot prices. Overall, the stainless steel market this week showed a weak game pattern marked by dashed peak-season expectations, sluggish end-user demand, futures breaking below lows, spot prices continuing to fall, inventory moving steadily, and losses keeping the market under pressure. In the short term, the failure of September peak-season demand to recover as expected and the spread of market pessimism remain the core bearish factors. The weak consolidation pattern in futures is hard to reverse, while slight cost-side support limits the room for deep declines.