[SMM Stainless Steel Daily Review] SS Futures Edged Up, Stainless Steel Spot Prices Remained Firm with Trading Inquiries Boosted

SMM May 25 reported that SS futures continued to hold up well. Driven by the overall strength of non-ferrous metal futures and SHFE nickel, SS futures rose in tandem. As of the midday close, the most-traded SS contract was quoted at 14,805 yuan/mt. In the spot market, buoyed by the slight upward probe in futures, spot quotes remained firm, with both market inquiries and transaction activity improving. However, the current macro environment still carried significant uncertainty, stainless steel mill production schedules stayed high, and the traditional off-season was gradually approaching, intensifying industry participants' concerns about the market outlook.

The most-traded SS futures contract held up well. At 10:15 AM, SS2605 was quoted at 14,860 yuan/mt, up 60 yuan/mt from the previous trading day. Spot premiums for 304/2B in the Wuxi area were in the range of 310-710 yuan/mt. In the spot market, the average price of cold-rolled 201/2B coils in Wuxi was basically stable with a downward bias; for cold-rolled untrimmed 304/2B coils, Wuxi averages were basically stable, and Foshan averages were basically stable; cold-rolled 316L/2B coils in the Wuxi area fell 50 yuan/mt; hot-rolled 316L/NO.1 coils in Wuxi were quoted down 175 yuan/mt; cold-rolled 430/2B coils in both Wuxi and Foshan were basically stable.

This week, the stainless steel market saw both futures and spot prices fluctuate in a largely stable manner, with futures movements primarily driven by industry news expectations and overall fluctuations remaining limited. Market sentiment was divided—traders held a weaker stance, but downstream end-user just-in-time procurement remained resilient. Combined with traders' active shipments, market supply continued to be absorbed, 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 trend reversal 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 relatively weak support. Spot and inventory side, the stabilization in futures drove spot prices to fluctuate in a largely stable manner. Although traders held a weaker stance due to earlier price cuts, end-user rigid demand transactions proceeded smoothly. Combined with agency traders cutting prices for shipments and accelerating supply 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 was basically stable and slightly exceeded 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 affected by macro and industry news disturbances, with relatively high uncertainty. After the US Fed leadership transition, hawkish statements have been more prevalent, compounded by frequent changes in Indonesian policies, leading to an intense tug-of-war between longs and shorts in the market. In the short term, the market maintains a fluctuating trend supported by cost expectations and rigid demand transactions, but as the industry approaches the traditional consumption off-season, end-use demand faces weakening pressure. Combined with the ample supply driven by high steel mill profits and high production schedules, the risk of supply-demand mismatch is intensifying, 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 areas to watch include US Fed policy directions, the implementation of Indonesian industrial policies, the sustainability of downstream rigid demand, and the pace of steel mill production schedules.