[SMM Stainless Steel Daily Review] SS Futures Fluctuated Downward, Spot Stainless Steel Prices Held Steady

SMM, May 22: SS futures were in the doldrums. The new US Fed chair officially took office today, and combined with the continued release of hawkish remarks from the US Fed recently, non-ferrous metal futures weakened overall today. SS also pulled back slightly following the trend. As of the close, the most-traded SS contract was quoted at 14,745 yuan/mt. Spot market side, although SS futures were weak, the overall decline was limited. Spot quotes mostly remained stable, with downstream end-users mainly making just-in-time procurement, and intraday transactions were steady.

The most-traded SS futures contract pulled back. At 10:15 AM, SS2605 was quoted at 14,800 yuan/mt, down 30 yuan/mt from the previous trading day. Spot premiums for 304/2B in the Wuxi area were in the range of 370-770 yuan/mt. In the spot market, the average price of cold-rolled 201/2B coils in Wuxi remained stable; for cold-rolled untrimmed 304/2B coils, Wuxi remained stable and Foshan average prices remained stable; cold-rolled 316L/2B coils in the Wuxi area remained stable; hot-rolled 316L/NO.1 coils were quoted stable in Wuxi; cold-rolled 430/2B coils in both Wuxi and Foshan remained stable.

This week, the stainless steel market saw both futures and spot moving sideways with a stable bias. Futures movements were mainly driven by industry news expectations, with limited overall fluctuations. Market sentiment was divided—traders had a weak mentality, but downstream end-user just-in-time procurement remained resilient. Combined with traders actively making shipments, market supply continued to be depleted, presenting an overall pattern of news providing a floor, rigid demand offering support, and fundamentals under pressure. Futures side, SS futures stopped falling and stabilized this week, moving sideways, with the turning point primarily driven by expectations of Indonesian industrial policy. The market expected tightening of Indonesian nickel ore supply and unified management of ferroalloy exports by state-owned enterprises, which pushed up raw material cost expectations, offset macro pessimism, and drove futures to stop falling and recover. This round of futures stabilization mainly relied on external news stimulus, with stainless steel's own supply-demand fundamentals providing weak support. Spot and inventory side, futures stabilization drove spot prices to fluctuate with a stable bias. Although traders had a weak mentality due to earlier price cuts, end-user rigid demand transactions were smooth. Combined with agency traders cutting prices to make shipments and accelerating cargo circulation, social inventory pulled back slightly to 939,200 mt this week, with low inventory levels providing phased support for spot prices. Cost side, steel mills continued to compress raw material procurement prices to offset market fluctuations. Smelting profits were basically stable, production willingness was sufficient, and the industry maintained a high production schedule pattern. During the week, mainstream steel mills' June steel mill tender price for high-carbon ferrochrome remained stable, slightly exceeding market expectations, reflecting steel mills' rigid demand providing a floor and overall strong raw material procurement demand. Overall, the current stainless steel market was significantly disturbed by macro and industry news, with strong uncertainty. After the US Fed leadership transition, hawkish statements increased, and combined with frequent changes in Indonesian policies, the tug-of-war between longs and shorts was intense. In the short term, the market maintains a fluctuating trend supported by cost expectations and rigid demand transactions. However, as the industry approaches the traditional consumption off-season, end-use demand faces weakening pressure. Coupled with the ample supply driven by steel mills' high profits and high production schedules, the risk of supply-demand mismatch is intensifying going forward, and the room for prices to come under pressure is gradually expanding. In the short term, the market is expected to move sideways, while medium and long-term pullback risks remain elevated. Going forward, key focus should be on US Fed policy developments, the implementation of Indonesia's industrial policies, the sustainability of downstream rigid demand, and the pace of steel mill production schedules.