SHANGHAI, Feb 2 (SMM) - In the stainless steel spot market, SMM survey shows that the downstream demand rose slowly in the first week after the Chinese New Year (CNY) holiday, but the stainless steel factories have increased the distribution of goods. As a result, the stocks available in the spot market has accumulated significantly. In addition, the vendor managed inventory of stainless steel factories jumped, and the inventory under warrants also expanded to a high level. Therefore, the spot prices trended lower under the pressure of high inventory.

In terms of cost, the NPI prices remained firm within the day, and stainless steel plants started to make inquiries after the CNY holiday. But the high costs have induced strong wait-and-see sentiment in the market. It is thus expected that NPI prices will remain stable in the short term.

The ferrochrome prices have risen slightly today, with sufficient market confidence and the persisting optimism over future demand for chrome ore on low inventory and low port arrivals. Meanwhile, the rising chrome ore prices have further lifted the cost of ferrochrome. In this context, ferrochrome prices are expected to strengthen in the near future.

On the whole, the cost support for stainless steel prices remains firm, while it will still take some time for the terminal demand to improve. The social inventories and in-plant inventories of stainless steel plants have already reached high levels.

SMM expects that in the short term, the spot prices of stainless steel will be stable or drop slightly under pressure, while the futures prices will inch lower.