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Was the Increase in SS Contract Caused by SHFE Nickel Prices or Fundamentals Support?
Sep 22, 2022 16:14CST
Source:SMM
Fed announced to raise the interest rate by 75 basis point last night, which was in line with market expectations, hence the impact on SS contract was limited. But SS contract rose sharply today.

SHANGHAI, Sep 22 (SMM) - Fed announced to raise the interest rate by 75 basis point last night, which was in line with market expectations, hence the impact on SS contract was limited. But SS contract rose sharply today.

In terms of futures: From the first half of September, under the influence of macro sentiment and short-term supply and demand mismatch, the stainless steel futures prices rose sharply. This week, the spot goods arrived, hence the tight supply eased, and the spot prices dell and stabilised. However, the SS contract remained high may because of the market game. In addition, SHFE nickel rose strongly for several days this week, which had certain impact on the SS contract.

In terms of fundamentals: On the supply side, the output of steel mills in September increased on  the month and the output was released to the market. Therefore, the supply increased. On the demand side, with the approaching of the National Day holiday, market transactions increased, but the transmission was not smooth. The demand for stainless steel in each industry was slightly different. Small stainless steel product industries such as hardware and home appliances were more willing to purchase and restock stainless steel, while infrastructure industries still purchased as needed. On the whole, the both supply and decline of stainless steel increased slightly. Amid the peak season, it is expected that the spot prices will fluctuate, which will give some support to the futures prices.

Overall, SMM believes that the SS contract will remain high in the short term, and the market should pay attention to the impact of demand after the holiday on the substantial increase in the demand of stainless steel.

Market

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