[SMM Stainless Steel Daily Review] SS Futures Fluctuated Rangebound; Bullish Sentiment for Spot Stainless Steel Was Dented

SMM reported on March 4 that SS futures held up well, fluctuating rangebound overall with limited upside momentum, and closed before noon at 14,205 yuan/mt. In the spot market, affected by factors including weakening momentum for further gains in SS futures, unchanged guidance prices from major mainstream stainless steel producers yesterday, expectations for a sharp increase in stainless steel production schedules within the month, and accumulating social inventory, bullish sentiment was dampened and quotes loosened.

The most-traded SS futures contract fluctuated downward. At 10:30 a.m., SS2604 was quoted at 14,245 yuan/mt, up 80 yuan/mt from the previous trading day. In Wuxi, spot premiums for 304/2B were in the 275-475 yuan/mt range. In the spot market, Wuxi cold-rolled 201/2B coils were steady on average; for cold-rolled trimmed-edge 304/2B coils, the average price in Wuxi was steady while the average price in Foshan fell by 50 yuan/mt; cold-rolled 316L/2B coils in Wuxi were steady; for hot-rolled 316L/NO.1 coils, Wuxi was quoted up 100 yuan/mt; cold-rolled 430/2B coils in both Wuxi and Foshan were steady on average.

The stainless steel market gradually recovered, with SS futures strengthening and pushing higher. Driven by warming expectations for the traditional peak consumption season of “Golden March and Silver April” and continued fermentation of news on Indonesian nickel ore, market participants were strongly bullish. However, the pace of recovery on the spot side was slow; some traders and downstream end-users had not yet resumed operations, market trading activity had not fully recovered, and only a small number of rigid-demand orders were concluded during the week, presenting a clear pattern of “strong futures, weak spot.” On the inventory side, stainless steel social inventory showed a significant seasonal inventory buildup, mainly due to the suspension of trading during the Chinese New Year holiday, continued arrivals of cargo, and some resources awaiting pick up goods. From an industry perspective, inventory buildup around the Chinese New Year is normal, and the magnitude of this buildup did not exceed market expectations; market confidence was not materially impacted, traders did not engage in panic shipments, and short-term inventory pressure remained within a controllable range. Supply side, domestic stainless steel mills carried out annual maintenance in a concentrated manner in February, with sizable production cuts and a sharp decline in production, easing short-term supply-side pressure. However, key attention should be paid to March, when steel mills will enter a concentrated phase of resuming production; production is expected to rise sharply, which will test demand’s ability to absorb supply during the “Golden March and Silver April” peak season, and the supply-demand pattern may see a phased adjustment. Cost support continued to strengthen: related news on Indonesian nickel ore continued to ferment, pushing ore prices steadily higher, which in turn lifted NPI production costs, with high-grade NPI prices rising steadily. Although transactions in the high-grade NPI market were limited this week and major mainstream stainless steel mills had not yet accepted the current high prices, with low purchase willingness, bullish sentiment remained strong and expectations for tight raw material supply were elevated, making prices difficult to decline. This provided strong support to stainless steel production costs, and steel mills still maintained reasonable profitability. Overall, the stainless steel market this week exhibited the core characteristics of “strong expectations, weak reality.” Strength in futures, improving expectations for the peak season, and relatively strong support from the cost side jointly boosted market confidence. However, weak spot trading, a sharp social inventory buildup, and supply pressure brought by concentrated production resumptions at steel mills in March also imposed clear constraints on the market. At present, the market’s core tug-of-war is centered on the pace of downstream demand recovery after the holiday, the progress of inventory digestion, and the implementation of steel mills resuming production in March. Going forward, close tracking of the above factors is needed to determine the direction of market trends.