Pre-holiday stainless steel social inventory slightly increased; inventory may significantly accumulate after the holiday amid limited demand [SMM Analysis]

As of September 26, SMM stainless steel social inventory was 969,600 mt, down 0.18% WoW, up 0.17% MoM. Among them, 200-series stainless steel inventory was 281,900 mt, up 0.21% WoW, up 0.48% MoM; 300-series stainless steel social inventory was 549,900 mt, up 0.04% WoW, basically flat, up 0.79% MoM; 400-series stainless steel social inventory was 137,900 mt, down 1.84% WoW, down 2.81% MoM.

For the 200-series, recent arrivals in Wuxi and Foshan were substantial. As stainless steel mills announced production cuts and price limits before the holiday, the spot prices of 201 stainless steel rose slightly, but actual transactions and inventory digestion were not ideal, with hot-rolled stainless steel transactions relatively better. Regionally, Wuxi's 201 inventory pressure was greater than Foshan's, with cold-rolled stainless steel inventory up 1.62% and hot-rolled stainless steel up 1.01%, while Foshan's 201 inventory decreased by 0.59%.

For the 300-series, pre-holiday arrivals in Wuxi were slightly higher. During the week, decreased cold-rolled stainless steel inventory was mainly concentrated in warehouse warrant inventory, with some warrants converted to spot inventory sales. The central bank's favorable policies boosted stainless steel futures, improving 300-series cold-rolled transactions, mostly for traders restocking, while downstream maintained restocking as needed. Hot-rolled stainless steel arrivals and transactions were relatively normal, with some resources expected to arrive post-holiday, leading to a decrease in last week's inventory. Thus, stainless steel prices rose last week, but social inventory digestion improved only slightly, with Wuxi's cold-rolled stainless steel inventory up 0.79% and hot-rolled stainless steel down 0.35%. Foshan's cold-rolled stainless steel inventory slightly increased by 0.29%, while hot-rolled stainless steel decreased by 2.53%.

For the 400-series, northern state-owned steel mills' resources were settled recently, with overall arrivals declining. The real estate sector's stock index surged, and frequent favorable policies boosted overall spot prices, enhancing 400-series transactions. During the week, the 400-series inventory overall decreased, with Wuxi down 1.35% and Foshan down 4.28%.

Overall, pre-holiday stainless steel was buoyed by futures, but actual downstream demand showed no significant growth. Notably, in addition to regular domestic steel mill arrivals, a large amount of Indonesian Yongwang cold-rolled resources also arrived in Wuxi, with a significant post-holiday inventory accumulation expected.