[SMM Stainless Steel Daily Review] New Nickel Ore Policy Boosted Stainless Steel Futures Prices, Cautious Downstream Demand Kept Transactions Weak and Spot Prices Stable

SMM April 14 reported that SS futures continued their strong upward probing trend. Influenced by yesterday's news of the adjustment to Indonesia's nickel ore HPM formula, both SHFE nickel and SS futures rose. As of the midday close, the most-traded SS contract was quoted at 14,600 yuan/mt. Spot market side, driven by the consecutive upward probing of SS futures and the adjustment to Indonesia's nickel ore HPM formula, market expectations were that NPI smelting costs would rise, strengthening confidence in cost support for stainless steel. However, downstream acceptance of high prices remained limited, and spot quotes had not yet followed the upward move, with overall transactions remaining relatively stable.

The most-traded SS futures contract strengthened and rose. At 10:15 AM, SS2605 was quoted at 14,590 yuan/mt, down 20 yuan/mt from the previous trading day. Spot premiums for 304/2B in the Wuxi area were in the range of 30-230 yuan/mt. In the spot market, the average price of cold-rolled 201/2B coils in Wuxi held steady; for cold-rolled trimmed-edge 304/2B coils, the average price in Wuxi held steady, and the average price in Foshan held steady; cold-rolled 316L/2B coils in the Wuxi area held steady; hot-rolled 316L/NO.1 coils were quoted steady in Wuxi; cold-rolled 430/2B coils in both Wuxi and Foshan held steady.

The stainless steel market was currently in the traditional peak season of "Golden March and Silver April." In the short term, macro tailwinds helped restore confidence, and spot inquiry activity increased. However, cautious sentiment among downstream end-users persisted, with purchases remaining needs-based. Acceptance of high-priced cargoes was poor, and transactions relied on low-priced resources, with no significant volume increase overall. Futures side, the US-Iran conflict de-escalated this week, with both sides reaching a two-week ceasefire agreement and initiating negotiations. Macro tailwinds boosted SS futures, and market sentiment eased somewhat. However, geopolitical risks had not been fully eliminated, and coupled with intensifying US inflation and discussions of rate hikes from the US Fed, market fluctuation risks increased. Futures struggled to sustain their rise, providing limited support to the spot market. Supply and inventory side, steel mill production schedules for April stayed high, and supply pressure remained unrelieved. Thanks to restored confidence, active inquiries, and the end of concentrated month-end cargo allocation in the prior period, social inventory pulled back slightly this week to 978,700 mt, down 0.55% WoW. However, under the backdrop of high supply, inventory destocking remained under pressure, and steel mill shipments faced challenges. Cost side, high-grade NPI had price support due to losses, but steel mills faced significant cost pressure with low willingness to purchase, keeping high-grade NPI prices subdued. Stainless steel scrap and high-carbon ferrochrome prices held steady, and stainless steel mills overall remained on the edge of breakeven, with the tug-of-war between upstream and downstream continuing. Overall, the core market contradiction this week lay in the interplay of macro uncertainties, high supply, and cautious demand. Although the peak season provided some support and the cost side formed a floor, it was difficult to push prices higher. Coupled with ongoing macro disturbances and persistent downstream wait-and-see attitudes, the market was expected to maintain relatively stable operations in the short term. Going forward, attention should be paid to the progress of US-Iran negotiations, US Fed policy directions, and the actual release of downstream demand.