Stainless steel futures contract experienced brief rebound, tracking swings of nickel price

Stainless steel futures contract experienced a surge followed by a pullback last week. As of November 30, the closing price rose by 285 yuan/mt compared to November 23. On the macro front, internationally, on Thursday, Williams said that the Fed is at, or near, the peak level of the target range of the federal funds rate. If inflationary pressures persist, the Fed may consider raising rates again. It is anticipated that the inflation rate will decrease to 3% this year, 2.25% in 2024, and 2% in 2025. The implementation of rate hikes is expected to further stress commodities. Domestically, the November manufacturing PMI, released on November 30, remained in the contraction territory for the second consecutive month, decreasing by 0.1 percentage points compared to the previous month. Economic activity in the manufacturing sector continued to decline. On the fundamental side, there is no apparent tightness in the supply from Fuxi and Foshan last week. Downstream and traders are maintaining low inventory levels, and overall, the supply situation still appears to be relaxed. On the demand side, there was a sudden surge in transaction intentions in Wuxi and Foshan last week. This was influenced by the abnormal rise in SHFE nickel on November 28, leading to a stainless steel rally. Consequently, downstream procurement intentions showed a brief recovery. Overall, inventory reduction was satisfactory last week, with a 2.2% decrease in total inventory in Wuxi and Foshan. High-grade NPI prices experienced a slight decline due to weak expectations from downstream stainless steel plants. NPI traders continued to offer discounts, contributing to a sustained weak trend in high-grade NPI in the short term. High-carbon ferrochrome prices remained stable. Short-term stainless steel consumption rebounded, coupled with firm chrome ore prices and the disappearance of low-priced goods in the market, leading to a temporary stabilization of high-carbon ferrochrome prices. In summary, the stainless steel contract surged, breaking through 14,000 yuan/mt last week. Short-term price rebound was influenced by nickel price fluctuations, but the upward resistance is significant due to weak fundamentals. SMM predicts that this week, the stainless steel market will experience narrow-range fluctuations.