SHANGHAI, Feb 16 (SMM) - The rebound of US dollar index suppressed the prices of commodities. Coupled with the high inventory, the most-traded stainless steel contract continued to fall. The stainless steel futures rose for a short moment today, but then fell back. As of 13:34, futures fell 0.27%.
The average spot price of 304/2B coil-raw (Wuxi) stood at 17,150 yuan/mt, flat from the previous trading day, but down 1.72% from 10 days ago. According to SMM research, the spot prices in Wuxi and Foshan markets declined.
On the macro front, the monthly rate of retail sales in the US stood at 3%, higher than the previous value of -1.1%. The data showed that demand in the United States was better than expected, which boosted the US dollar and suppressed commodities prices.
Fundamentals
In terms of inventory, social inventory and in-plant inventory continued to accumulate. According to SMM research, in mid-February, although stainless steel mills continued to lower their prices, the current prices are still higher than the spot transaction prices. The costs weighed on the restocking of traders. At the same time, stainless steel mills adjusted the arrivals of goods alleviated the mismatch between supply and demand.
In addition, most producers have resumed. With the gradual release of terminal demand, the producers may be more willing to stock up. SMM expects that the spot price of stainless steel will decline slightly in February, and the inventory may be slowly digested. It is still necessary to continue to pay attention to the substantial increase in terminal demand.
On the demand side, according to SMM research, Tsingshan prices declined compared with the previous day, but were still higher than the spot transaction prices. Therefore, the orders were less than expected. Amid poor orders, processing plants were less willing to stock up.
On the cost side, on February 15, the NPI prices remained flat. Under the strong support of nickel ore prices, some NPI factories quoted firm. But some large steel mills were cautious in purchasing. As such, the short-term NPI prices declined sligthly.
The prices of ferrochrome dropped slightly even with tight chrome ore supply. Ferrochrome factories lowered their purchasing prices amid the bearish outlook. Ferrochrome prices will remain stable in the short term. To sum up, SMM expects stainless steel prices to remain weak in the short term amid weak fundamentals, high inventory and weak demand.