[SMM Stainless Steel Daily Review] Futures Stop Falling but Fail to Alter Cautious Sentiment; Spot Stainless Steel Quotes Remain Stable

SMM, Jun 11 – SS futures stopped falling and stabilized. Supported by the stabilization of SHFE nickel futures, SS futures also stabilized simultaneously. As of the midday close, the most-traded SS contract was quoted at 14,380 yuan/mt. In the spot market, although supported by the stabilization of SS futures, stainless steel spot quotes were basically stable overall. However, spot traders lacked confidence and showed a strong willingness to sell, leaving some room for price negotiation, and some low-priced goods flowed out.

The most-traded SS futures contract retreated. At 10:15 AM, the SS2607 contract was reported at 14,405 yuan/mt, up 10 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi were in the 565-1,215 yuan/mt range. In the spot market, the average price of cold-rolled 201/2B coils in Wuxi remained flat; for cold-rolled unedged 304/2B coils, the average price in Wuxi remained flat, while the average price in Foshan remained flat; the cold-rolled 316L/2B coil price in Wuxi fell by 175 yuan/mt; the hot-rolled 316L/NO.1 coil quoted price in Wuxi fell by 150 yuan/mt; cold-rolled 430/2B coil prices in both Wuxi and Foshan held stable.

Stainless steel futures and spots experienced heightened volatility. The futures market, disturbed by overseas macro news, rose initially before pulling back, as the off-season characteristics of the market fully emerged. Industry expectations for the later period were ambiguous, with a strong wait-and-see sentiment. Transactions recovered in a pulsed manner but lacked sustainability, increasing shipment pressure on traders, who mostly boosted transactions through discounts. Overall, the market presented a game pattern of macro news disturbing the futures, weakening off-season demand, marginal fine-tuning of supply, and inventory stopping destocking and building up. On the futures side, SS futures fluctuated violently, retreating after a rapid rise. During the week, the US adjusted import tariffs on some steel, aluminum, and copper, boosting market sentiment and driving a collective rally in the non-ferrous metal sector. SS futures simultaneously surged to 15,175 yuan/mt. However, subsequent US economic data showed persistent inflationary pressure, rising expectations for US Fed interest rate hikes, which suppressed bulk commodity prices. Metal futures collectively weakened, and SS futures pulled back accordingly. Recent price movements were dominated by macro news, with relatively weak support from industry chain fundamentals. In terms of spot and inventory, the mid-week surge in futures drove spot prices to strengthen temporarily, releasing the market’s sentiment of rushing to buy amid continuous price rise, and short-term transactions recovered. However, the market had already entered the traditional consumption off-season, with overall weak rigid demand from end-users. After the pullback in futures, transactions turned mediocre again. Affected by weak transactions, traders generally offered discounts to move goods. On the supply side, some steel mills planned maintenance and production cuts in June, causing a slight pullback in industry production, moderately easing goods pressure. However, given the limited scale of production cuts, supply pressure has not substantially eased. Weighed down by the weak supply-demand pattern, this week’s social inventory of stainless steel built up slightly to 940,400 mt, ending the previous destocking trend. On the cost and raw material side, raw material prices were mediocre overall. The price rise of high-grade NPI slowed down, while stainless steel scrap and high-carbon ferrochrome prices remained basically stable. The raw material side lacked upward momentum, offering limited boost to finished product prices. Current steel mill profitability is good, with profit margins based on spot raw material costs maintained at 2%-3%, and those based on inventory raw material costs reaching 3.5%-5%. Ample profits support steel mills' production enthusiasm, and the overall industry production schedule is high. Supported by stable costs and moderate profits, steel mills have weak willingness to proactively cut production, and the supply side only sees marginal adjustments. Overall, the current stainless steel market is significantly affected by macro disturbances, with futures dominating spot price trends, and the overall market sentiment remains cautious. From the fundamental perspective, the weakening demand trend in the off-season is clear, and sluggish end-user transactions are the core bearish factor. Although maintenance at steel mills brings a slight supply contraction, high profits support high production schedules, breaking the weak supply-demand balance and causing a slight inventory rebound. The raw material side provides weak support, which is insufficient to offset demand-side pressure. The risk of supply-demand mismatch persists, and prices remain under pressure overall. Subsequent focus will be on US Fed policy expectations, SS futures fluctuations, changes in downstream off-season rigid demand, and the progress of steel mill maintenance implementation.