[SMM Stainless Steel Daily Review] SS Futures Fluctuated Steadily as Chinese New Year Holiday Approached, Most Stainless Steel Traders Already on Holiday

SMM February 9, SS futures showed a relatively strong and rangebound fluctuation pattern. The phased impact from the macro perspective gradually faded, and with the approaching Chinese New Year holiday, market activity declined. SS futures operated on a relatively stable tone and finally closed at 13,735 yuan/mt. In the spot market, most traders had already entered the holiday, and those who had not were mostly in the closing stage. A small number of transactions were mainly concentrated on post-holiday futures orders, with prices overall basically stable.

The most-traded SS futures contract fluctuated weakly. At 10:30 a.m., SS2603 was quoted at 13,770 yuan/mt, up 15 yuan/mt from the previous trading day. In Wuxi, the spot premium/discount for 304/2B was in the range of 400-600 yuan/mt. In the spot market, the average price of cold-rolled 201/2B coil in Wuxi was reported at 8,500 yuan/mt; the average price of cold-rolled mill-edge 304/2B coil was 14,100 yuan/mt in Wuxi and 14,050 yuan/mt in Foshan; the price of cold-rolled 316L/2B coil in Wuxi was 26,600 yuan/mt, and in Foshan it was 26,600 yuan/mt; the price of hot-rolled 316L/NO.1 coil in Wuxi was reported at 25,750 yuan/mt; the price of cold-rolled 430/2B coil in both Wuxi and Foshan was 7,800 yuan/mt.

This week, repeated fluctuations in macro sentiment, combined with a significant pullback in precious metal prices, dragged down the overall nonferrous metals futures, and stainless steel futures also showed wild swings in sync. At the beginning of the week, prices once hit the limit down, and although a restorative rebound gradually unfolded afterwards, the overall weak trend did not fundamentally reverse. The spot market was dragged down by futures fluctuations and moved downward in sync, with market sentiment fluctuating along with the futures, overall tending to be cautious and conservative. As the Chinese New Year holiday approached, some traders had already taken leave and left the market this week, and market trading activity continued to decline. Only during the brief period of the futures' restorative rebound did downstream users conduct a small amount of rigid demand restocking; overall transactions remained sluggish. Inventory side, stainless steel social inventory showed a slight buildup this week, but the overall inventory level remained at a historically low range, and traders' inventory pressure was relatively limited. Coupled with market expectations for a positive consumption season after the holiday (the "Golden March, Silver April"), there was no panic selling phenomenon, which to some extent alleviated the downward pressure on spot prices. In February, stainless steel mills will successively start their annual maintenance plans, and planned production is expected to decrease significantly. However, downstream end-use industries also enter the Chinese New Year holiday simultaneously, and demand will stagnate phase by phase. The positive effect of supply reduction is offset by demand contraction, providing relatively limited support to market prices. Cost side, prices of high-grade NPI and stainless steel scrap pulled back, and stainless steel production costs declined in sync. Currently, steel mills can still maintain a slight profit, and the cost side provides some bottom-line support. Overall, this week the stainless steel market was dominated by futures and macro sentiment, with relatively weak fundamental support from the spot market. Combined with factors such as sluggish pre-holiday transactions and traders leaving for the holiday, the market showed a weak and rangebound pattern. However, favorable factors such as relatively low inventory, positive post-holiday expectations, and cost support effectively limited the downside room for prices. In the short term, sentiment-driven capital flows before the holiday and fluctuations in futures will continue to dominate market trends. Going forward, close attention should be paid to the macroeconomic trajectory and the pace of recovery in downstream demand after the holiday.