[SMM Stainless Steel Daily Review] Geopolitical Risks Eased, SS Futures Stopped Falling and Rebounded, Stainless Steel Spot Transactions Recovered

SMM, April 22: SS futures showed signs of stopping falling and rebounding. The US-Iran conflict de-escalated, with the US announcing an indefinite ceasefire and Iran suspending military operations. Influenced by this, non-ferrous futures strengthened, and SS futures rose in tandem. As of the midday close, the most-traded SS contract was quoted at 14,920 yuan/mt. Spot market side, although SS futures stopped falling today, futures prices had already pulled back from earlier levels. In addition, after stainless steel spot prices surged significantly, downstream acceptance remained low, and transaction performance was weak. However, traders held low-priced cargoes from earlier periods and had room to offer concessions, leading spot quotes to pull back, with inquiries and transactions recovering somewhat.

The most-traded SS contract stopped falling and strengthened. At 10:15 AM, SS2605 was quoted at 14,885 yuan/mt, down 15 yuan/mt from the previous trading day. Spot premiums for 304/2B in the Wuxi area ranged from 35-235 yuan/mt. In the spot market, the average price of cold-rolled 201/2B coils in Wuxi remained flat; for cold-rolled untrimmed 304/2B coils, the average price in Wuxi fell by 50 yuan/mt, and the average price in Foshan fell by 100 yuan/mt; cold-rolled 316L/2B coils in the Wuxi area held steady; hot-rolled 316L/NO.1 coils were quoted stable in Wuxi; cold-rolled 430/2B coils in both Wuxi and Foshan held steady.

The stainless steel market is currently in the traditional peak season of "Golden March and Silver April." Driven by futures, spot quotes strengthened somewhat, but downstream end-user wait-and-see sentiment persisted, with concerns over short-term price fluctuations. Procurement did not show a significant increase in volume, and transactions were mostly arbitrage purchases by trading firms engaging in both spot and futures market and cargo pick-up of earlier orders, with overall demand not fully matching the price gains. Futures side, Indonesia officially revised the nickel ore Harga Patokan Mineral (HPM) calculation formula this week, and nickel ore prices are expected to rise notably, driving up costs of related nickel-series products. Boosted by this positive development, both SHFE nickel and SS futures explored upward significantly, with SS futures once breaking through the year-to-date high, and market sentiment was notably lifted. Supply and inventory side, stainless steel mill production schedules remained at relatively high levels, and supply pressure persisted. Benefiting from increased market inquiries driven by futures and increased cargo pick-up of earlier orders, stainless steel social inventory further pulled back to 961,100 mt this week, down 1.8% WoW. Cost side, affected by the adjustment of Indonesia's nickel ore HPM, high-grade NPI prices stopped falling and rose, and stainless steel mills increased their NPI procurement volume, further reinforcing price support. The stainless steel scrap market showed a steady-to-rising trend, rising in tandem driven by its cost advantage over high-grade NPI and the strengthening of stainless steel finished product prices (the same hereinafter). Stainless steel production costs shifted upward, but the increase was less than that of finished product prices, and steel mill profits gradually recovered. Overall, the core market contradiction this week lay in the interplay between cost expectations driving prices up and insufficient real downstream demand amid high supply levels. Although favorable Indonesian nickel ore policies drove futures higher and provided support on the cost side, the cautious sentiment among downstream end-users remained difficult to change. Combined with the unchanged high production schedule pattern at steel mills, stainless steel prices were expected to stabilize at highs in the short term, with certain resistance to further upward movement.