Futures Market Fluctuates and Declines; Tariff Policy May Bring Positive Impact [SMM Analysis]

This week, the most-traded SS2503 futures contract showed a fluctuating downward trend. The opening price on Monday was 13,310 yuan/mt, followed by a sharp drop to 12,955 yuan/mt. After a week of fluctuations, the price pulled back to 12,975 yuan/mt on Friday and eventually closed at 13,040 yuan/mt.

Macro front, according to reports from Reuters and Bloomberg, US President Trump stated in a Fox News interview on the evening of January 23 that he preferred not to raise tariffs on China but emphasized that tariffs are a "great power." In December last year, Reuters reported that the New York Federal Reserve also believed that the tariff hike on China harmed US companies, particularly those engaged in trade with China.

Fundamentally, apart from state-owned enterprises and some traders combining futures and spot operations, most market participants have already started their holiday this week, leading to relatively cold market sentiment. As the Chinese New Year approaches, inventory has increased, coupled with a relatively small decline in January steel mill production, suggesting that post-holiday inventory buildup may persist. Therefore, the current fundamentals of stainless steel are mediocre due to the holiday impact, and it is expected that the market will continue to face strong supply and weak demand after the holiday. The situation may improve once part of the market inventory is digested. Macro tariff-related positive news may boost electronic trading after the holiday.

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