According to SMM on September 24, SS futures consolidated on a strong note. Although the night session weakened at one point, the market gradually recovered and strengthened after the morning open. By the close, the most-traded SS contract settled at 13,815 yuan/mt. In the spot market, as the last trading day before the Mid-Autumn Festival, most downstream end-users had already completed pre-holiday stockpiling. Coupled with the weak sentiment from the night session, spot inquiries and transactions were sluggish in the morning, and trader quotes pulled back slightly along with it.
The most-traded SS futures contract. At 10:15 a.m., SS2611 was quoted at 13,760 yuan/mt, down 95 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi were in the range of 460-810 yuan/mt. In the spot market, the average price of Wuxi cold-rolled 201/2B coil remained flat; for cold-rolled mill-edge 304/2B coil, the average price in Wuxi fell 25 yuan/mt, while the Foshan average price remained flat; the price of cold-rolled 316L/2B coil in Wuxi remained flat; for hot-rolled 316L/NO.1 coil, Wuxi quotes remained flat; cold-rolled 430/2B coil in both Wuxi and Foshan remained flat.
This week, stainless steel futures showed a pattern of rebounding from lows and consolidating in recovery, with improving macro sentiment dominating the pace of the futures. Earlier, under the pressure of macro headwinds and sluggish demand, the futures fell deeply and touched a yearly low of 13,290 yuan/mt. Following the US Fed's rate hike, the previously accumulated macro headwinds were largely priced in, market pessimism eased, and SS futures saw a sustained recovery and rise, breaking away from the previous one-sided decline and stabilizing with a rebound from lows. The spot market continued its weak tone of a failed peak season, with demand-side recovery remaining insufficient. Futures and spot showed a divergent pattern of recovering sentiment but weak rigid demand. The expected recovery of the traditional "September peak season" has been thoroughly disproven, with no growth in substantive end-user recovery. Additionally, with the Mid-Autumn Festival and National Day holidays approaching, downstream pre-holiday stockpiling willingness remained low, and overall market trading was sluggish with weak confidence. However, the bargaining power for pre-holiday rigid demand purchases weakened marginally, and spot prices followed the futures in completing a recovery from lows. On the supply side, news of stainless steel mill production cuts in September and October continued to materialize, and the pace of industry capacity release slowed. Meanwhile, affected by weather disruptions, Indonesian NPI production is expected to see a phased pullback, limiting the downside for NPI and providing bottom support for futures and spot prices. Costs and profits continued to recover, with steel mill losses further easing, and the cost side constraining the upside for prices. This week, mainstream steel mills announced the October steel mill tender price for high-carbon ferrochrome, abandoning the year-long strategy of ensuring supply and holding prices firm, with a sharp reduction of 200 yuan/mt, falling below the production cost line of ferrochrome enterprises and further loosening chromium cost support. At the same time, NPI prices continued to pull back, and declining raw material prices continued to shrink steel production costs, driving the continued recovery of stainless steel mills from losses. Overall, the stainless steel market this week showed a game of macro headwinds materializing, futures repairing at lows, peak-season demand being falsified, weak pre-holiday restocking, marginal supply contraction, and recovery from losses. In the short term, persistently weak end-use demand and subdued market confidence remain the core constraints, and with no strong bullish support from fundamentals, stainless steel prices lack sufficient upward momentum. However, with macro headwinds largely priced in, expected production cuts at steel mills, social inventory at reasonable lows, and spot prices at year-to-date lows, the momentum for a deep decline has largely dissipated. On balance, both upward and downward logic in the current stainless steel market is constrained, and the market has fallen into a low-level consolidation pattern where it is difficult to rise or fall, with the short-term trend likely to continue as a weak recovery and sideways movement.
