SMM Daily Comments (May 16): Most Base Metals Prices Closed with Losses, SHFE Nickel, Stainless Steel Plunge, Oil Gained on G7 New Measures, US Strategic Petroleum Reserve Replenishment and Supply Concerns

[SMM Stainless Steel Daily Commentary] SS Futures Consolidate on a Subdued Note, Spot Stainless Steel Largely Stable; Trading Remained Sluggish Amid Off-Season and Typhoon Impact According to SMM on August 10, SS futures pulled back slightly. The night session on Friday saw SS decline, but after opening on Monday, it largely maintained a consolidation pattern. As of the close, the most-traded SS contract settled at 14,615 yuan/mt. In the spot market, the fluctuation range of SS futures was limited, and traders' spot quotations were largely stable. However, as the market remains in the demand off-season, compounded by the impact of typhoon weather, trading remained sluggish. SS futures most-traded contract. As of 10:15 a.m., SS2610 was at 14,655 yuan/mt, up 85 yuan/mt from the previous trading day. Spot premiums for Wuxi 304/2B were in the range from 315 to 665 yuan/mt. In the spot market, the average price of Wuxi cold-rolled 201/2B coil was stable; the average price of cold-rolled 304/2B coil, trimmed edge, was flat in Wuxi and flat in Foshan; the price of cold-rolled 316L/2B coil in the Wuxi area was flat; the quotation for hot-rolled 316L/NO.1 coil in Wuxi was flat; and cold-rolled 430/2B coil in both Wuxi and Foshan was flat. This week, stainless steel futures were disturbed by both industry news and capital flows, showing a pattern of wild swings overall, with an intense tug-of-war between bulls and bears. During the week, news on additional nickel ore quotas from Indonesia's RKAB repeatedly stirred market expectations, coupled with shifts in capital flows in the futures market, leading SS futures to rise initially before falling. Mid-week, prices briefly tested the 15,100 yuan/mt level, but subsequently, as expectations for nickel ore quota growth heated up, the confidence of bulls faded, and the futures...

[SMM Analysis] Cost Fluctuations Under News-Driven Disturbances, Stainless Steel Profits Narrowed Stainless steel product prices and production costs pulled back slightly in tandem this week, leading to narrowed overall smelting profits at steel mills. Based on 304 cold-rolling calculations, the profit margin for the week stood at 1.7% when calculated with current raw materials, and 1.84% with inventory raw materials. Stainless steel mills still retained some smelting profits. For nickel-based raw materials, high-grade NPI prices consolidated on a strong note this week. During the week, SHFE nickel and SS futures experienced wild swings amid news of Indonesia’s RKAB supplementary quota, which led to fluctuations in NPI prices. Downstream steel mills are currently in the off-season for consumption and showed limited acceptance of high-priced raw materials. Moreover, the price swings further amplified the cautious wait-and-see sentiment, keeping overall purchasing activity subdued. As of Friday, the price of Indonesia-origin high-grade NPI with 10-12% grade in China rose 1.5 yuan/mt per nickel unit, to 1,138 yuan/mt per nickel unit on a cif basis including tax. Stainless steel scrap prices remained largely stable this week. Affected by the Indonesian news, SS futures saw wild swings, while spot products pulled back slightly but showed notable resilience. High-grade NPI prices held up well, and with the tug-of-war between longs and shorts, stainless steel scrap held steady, supported by its cost advantages. While expectations improved for better rigid demand amid the higher August production schedule, end-use demand in the off-season remained sluggish, steel mill profits were constrained, and the desire to bargain down prices persisted, limiting overall upside room. In the short term, prices are expected to maintain a broadly steady, consolidating pattern. As of Friday, mainstream 304 off-cuts in Shanghai were unchanged at 10,450 yuan/mt. For chrome-based raw materials, high-carbon ferrochrome prices pulled back slightly this week. Although the market expects stainless steel output to increase in August...

[SMM Stainless Steel Scrap Weekly Review] Cost Advantages Underpin Stainless Steel Scrap Holding Steady; Weak Off-Season Demand Caps Upside Room This week, the price of 304 stainless steel scrap off-cuts in east China remained unchanged, with a quotation range of 10,400-10,500 yuan/mt; prices in Foshan pulled back slightly, within a range of 10,200-10,500 yuan/mt. An analysis of raw material production costs shows that the cost of producing stainless steel using only stainless steel scrap is about 14,607.48 yuan/mt, while using only high-grade NPI reaches 14,968.22 yuan/mt, with the two maintaining a stable cost spread. Stainless steel scrap prices were broadly stable this week. Indonesian news disrupted market sentiment during the week, and SS futures swung wildly. The futures fluctuations transmitted to the spot market, driving concurrent swings in spot stainless steel products, but overall prices only pulled back slightly, highlighting the resilience of spot prices. The price of the alternative raw material high-grade NPI continued to consolidate on a strong note, and the overall tone on the raw material side was relatively steady. Caught in a tug-of-war between bullish and bearish factors, stainless steel scrap prices remained stable during the week. Overall, cost advantages and production resumption expectations provided support, but end-user off-season fundamentals continued to suppress price increases. The market is still in the traditional stainless steel consumption off-season, and downstream end-user demand for finished steel products is generally weak, leaving the market without a sustained upward driver from end-user demand. Although the market expects stainless steel production schedules to improve in August, which may lift rigid demand for stainless steel scrap, and the current economic advantages of stainless steel scrap remain in place, providing potential bullish support for the market…