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 Review] Futures Extend Weakness and Break Below Support; Stainless Steel Spot Offers Hold Steady, Transactions Sluggish SMM reported on August 31 that SS futures extended their previous weak trend and continued to slide, breaking below the 13,900 yuan/mt mark. By the close, the most-traded SS contract closed at 13,890 yuan/mt. In the spot market, although stainless steel mills held guidance prices steady and most traders kept their offers stable, successive declines in SS futures further weakened market confidence; transactions remained sluggish and showed no sign of recovery before the peak season. The most-traded SS futures contract. At 10:15 a.m., SS2610 was quoted at 13,865 yuan/mt, down 120 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi were in the 485-885 yuan/mt range. In the spot market, the average price of cold-rolled 201/2B coils in Wuxi was unchanged; for cold-rolled 304/2B mill-edge coils, the average price in Wuxi held steady and the average price in Foshan held steady; cold-rolled 316L/2B coil prices in Wuxi were unchanged; hot-rolled 316L/NO.1 coil offers in Wuxi were unchanged; cold-rolled 430/2B coils in both Wuxi and Foshan were unchanged. This week, stainless steel futures overall showed a weak breakdown trend, with volatility intensifying and the price center shifting steadily lower. Futures were in the doldrums overall during the week. Midweek, an unexpected safety incident at a ferronickel smelting line in east China raised market supply concerns, briefly driving SS futures up in a rebound. However, the positive boost proved short-lived; the market's core bearish logic remained unchanged, and futures subsequently weakened again...

[SMM Analysis] Peak Season Expectations Fall Short, Stainless Steel Product Prices and Production Costs Both Decline, Steel Mills Continue to Incur Losses This week, stainless steel product prices and production costs pulled back in tandem, and stainless steel mills remained loss-making. For 304 cold-rolled stainless steel, the profit margin based on current raw materials this week was -0.37%, while that based on inventory raw materials was -0.98%. Nickel raw material side, high-grade NPI prices fell further this week. Expectations for a peak season recovery in stainless steel demand fell short. Coupled with the drag from falling SS futures and rising port inventories of high-grade NPI, market pessimism deepened further, transactions remained weak, some stainless steel mills were reported to have made 300-series production cuts, and NPI prices overall remained in the doldrums. As of this Friday, China's tax-inclusive landed price for 10-12% grade Indonesian high-grade NPI fell by 5.5 yuan/nickel unit to 1,126 yuan/nickel unit. Stainless steel scrap prices were temporarily stable this week. During the week, SS futures trended lower, bearish sentiment spilled over to the spot market, stainless steel products and high-grade NPI weakened in tandem, and the overall market tone was bearish. Stainless steel scrap found support from its cost-substitution advantage, and its prices did not follow the decline in futures. However, cost support ultimately could not withstand fundamental pressure. Recovery expectations for the "September-October peak season" fell short, downstream demand was insufficient, steel mill profits narrowed, procurement attitudes were cautious, market expectations for a bullish turn in September futures were subdued, and overall transactions were sluggish. With multiple bearish factors stacking up, cost support continued to weaken. In the short term, stainless steel scrap lacked upward momentum, and the market was likely to remain weak. As of this Friday, mainstream 304 off-cuts in the Shanghai area, excluding tax, ...

[SMM Stainless Steel Scrap Market Weekly Review] Continued Weakness in Futures and Spot Weighed on Market Sentiment; Cost Advantages Provided a Floor, Keeping Stainless Steel Scrap Prices Temporarily Steady This week, prices of 304 stainless steel scrap off-cuts in east China held flat, with a quotation range of 10,250-10,350 yuan/mt; prices of 304 stainless steel scrap off-cuts in Foshan also stayed steady, with a price range of 10,150-10,450 yuan/mt. From the perspective of raw material production costs, the cost of producing stainless steel entirely from stainless steel scrap was about 14,426.56 yuan/mt, while the cost of producing it entirely from high-grade NPI reached 14,885.76 yuan/mt, and the two still maintained a certain cost spread advantage. This week, stainless steel scrap prices overall temporarily remained steady. During the week, SS futures fell further to new lows, with bearish sentiment in futures continuing to be released and transmitted to the spot cargo market, driving finished stainless steel prices to pull back in tandem; prices of the substitute raw material high-grade NPI also remained in the doldrums, and the overall sentiment across futures, spot, and the raw material side was bearish. However, stainless steel scrap still retained certain economic advantages over high-grade NPI, and its cost-substitution attribute continued to provide a floor, supporting stainless steel scrap prices to temporarily stay stable this week, without falling in tandem with futures. Overall, the cost floor was difficult to offset the bearish fundamentals. The market’s previously held expectations for a consumption recovery during the September-October peak season fell short, downstream demand provided insufficient support, and coupled with a marked narrowing of stainless steel mills’ own profit margins, raw material procurement sentiment remained cautious amid pressure on the production side. The market’s expectations for a rise in September futures were weak, further weighing on steel mills’ willingness to restock, and this week stainless steel scrap...