[SMM Stainless Steel Daily Review] SS Moved Sideways with Spot Stainless Steel Stabilizing, Off-Season Competition in the Stainless Steel Market Intensified

SMM May 29 reported that SS futures remained in the doldrums. Although the night session performance was relatively firm, after the morning opening, dragged down by SHFE nickel's decline, SS futures moved lower in a fluctuating trend. As of the close, the most-traded SS contract was quoted at 14,870 yuan/mt. Spot market side, SS futures fluctuated within a relatively small range during the week, and most stainless steel spot traders mainly shipped at stable prices. The market generally reported that the industry was gradually entering the off-season, with downstream demand continuing to weaken. Although some stainless steel mills announced production cuts and maintenance, the overall expected decline in planned production was limited, and destocking pressure remained significant.

The most-traded SS futures contract held up well. At 10:15 AM, SS2607 was quoted at 14,885 yuan/mt, up 20 yuan/mt from the previous trading day. Spot premiums for 304/2B in the Wuxi area were in the range of 285-685 yuan/mt. Spot market side, the average price of cold-rolled 201/2B coils in Wuxi remained stable; for cold-rolled untrimmed 304/2B coils, Wuxi prices held steady, and Foshan average prices remained stable; 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 remained stable.

This week, the stainless steel market saw futures edge up slightly while spot prices moved sideways and stabilized. Futures-spot linkage was weak, and the market officially entered the traditional consumption off-season, with intensifying tug-of-war between longs and shorts on fundamentals. Traders had weak confidence in the market outlook with strong wait-and-see sentiment, but the slight recovery in futures stabilized market activity. Combined with steel mill agents shipping at stable prices and sustained rigid downstream demand providing a floor, social inventory continued modest destocking. The overall pattern featured slight recovery in futures sentiment, rigid demand supporting spot cargo, weakening off-season demand, and supply staying high. Futures side, SS futures edged up this week to test a rebound, but upward momentum was insufficient, with futures consistently failing to break through 15,000 yuan/mt. This rebound lacked substantive fundamental support and was driven solely by market sentiment recovery, with limited upside room, making it difficult to drive spot prices up in tandem, maintaining an overall fluctuating trend within a narrow range. Spot and inventory side, the slight recovery in futures supported stable spot quotes, with steady rigid demand transactions in the market. Currently, the off-season effect was evident, with downstream purchase intensity gradually weakening and steel mills receiving fewer forward orders. However, the recovery in futures improved market sentiment, and combined with active shipments by steel mill agents, social inventory continued modest destocking to 936,300 mt this week, with low inventory levels providing some support for spot cargo. Cost and supply side, raw material prices were generally stable, with the uptrend in high-grade NPI slowing down, and stainless steel scrap and high-carbon ferrochrome prices holding steady. Current steel mill profitability was moderate, with spot raw material calculated profit at 2%-3% and inventory raw material calculated profit at 3.5%-5%. Considerable profits supported steel mills in maintaining high production schedules. Affected by insufficient orders during the off-season, the industry sought to stabilize prices. Most steel mills no longer increased production, and some enterprises planned maintenance and production cuts, but the overall high supply pattern of the industry did not see a significant shift. Overall, the weakening trend of stainless steel off-season demand was clear, forward orders were sluggish, and demand-side support continued to decline. In the short term, futures recovery, rigid demand, and low inventory levels could support stainless steel spot prices against declines, but high production schedule pressure under high steel mill profits persisted. Going forward, off-season demand will further pull back, the supply-demand mismatch will gradually intensify, and the risk of price pullback will rise. Key factors to watch going forward include the sustainability of futures rises, changes in downstream rigid demand, the implementation of steel mill maintenance plans, and raw material price fluctuations.