Futures and Spot Both Gaining Momentum, Stainless Steel Market Active and Rising [SMM Stainless Steel Spot Daily Review]

March 7—

According to an in-depth survey by SMM, the stainless steel market has shown a significant increase in activity this week, with prices trending upward and transactions improving. In the futures market, the most-traded stainless steel futures contract SS2505 fluctuated upward. As of 10:30 a.m. on March 7, the most-traded SS2505 futures contract price surged significantly to 13,450 yuan/mt, an increase of 200 yuan or 1.6%. Spot premiums and discounts for 304/2B fluctuated noticeably, with stainless steel spot premiums in Wuxi ranging from -100 to 200 yuan/mt.

This week, stainless steel spot prices also showed a clear upward trend. On one hand, the continuous rise in raw material prices and the successive price increases by major mills jointly pushed market prices higher. For example, in the Wuxi and Foshan markets, prices for various stainless steel products rose to varying degrees compared to last Friday. In the Wuxi market, the price of 201/2B coils increased by 75 yuan, while 304/2B coils (mill edge) rose by 150 yuan. In the Foshan market, 201/2B coils increased by 75 yuan, and 304/2B coils (mill edge) rose by 50 yuan.

From the perspective of the supply-demand pattern, the demand side is gradually recovering, with procurement volumes rebounding; however, the transaction center remains relatively low. Although post-holiday market demand has shown signs of recovery, overall transaction prices remain at relatively low levels. In terms of supply, steel mills have increased their production schedules for March, resulting in ample market supply and continued accumulation of social inventory. For instance, last week, SHFE stainless steel registered warehouse warrant inventory increased significantly by 49,264 mt from the previous week's 106,502 mt, reaching 155,766 mt.

Analyzing the main influencing factors, the cost side has seen a continuous rise in raw material prices recently, leading to a significant increase in steel mill production costs and a profit inversion, which has supported stainless steel prices to some extent. From a macro perspective, following the release of favorable news on March 4 (policy-related benefits attached below), the futures market responded with a rise, which in turn drove price increases for some products in the spot market.

Overall, the current stainless steel spot market is in a delicate state where demand is gradually recovering, but supply remains abundant. Prices have already risen under the influence of cost and macro factors. Looking ahead, the key factors determining market trends will be the pace of social inventory digestion, subsequent production schedules of steel mills, and raw material price trends, which all market participants need to closely monitor.

Attached: Favorable Information for the Stainless Steel Market

Policy-Related Benefits: The third session of the 14th National Committee of the Chinese People's Political Consultative Conference opened at 3 p.m. on March 4, 2025. The market expects that more robust monetary and fiscal policies will be introduced during the Two Sessions. For instance, in terms of monetary policy, further RRR cuts and interest rate cuts may be implemented to help enterprises reduce financing costs. Additionally, policies are expected to place greater emphasis on expanding domestic demand and promoting consumption, with the domestic consumption environment anticipated to improve steadily. This is a positive signal for the demand side of the stainless steel market, with multiple stainless steel application sectors such as home appliances, automobiles, and home decoration likely to continue benefiting.

Market Opening Benefits: With the approval of the China Securities Regulatory Commission, starting from the trading session on March 4, 2025 (night session on March 3), the Shanghai Futures Exchange will expand the range of tradable products for Qualified Foreign Institutional Investors (QFIIs) and Renminbi Qualified Foreign Institutional Investors (RQFIIs), adding stainless steel futures contracts to the list. This will enable foreign capital to participate in the stainless steel futures market, potentially enhancing market liquidity and activity.

For any inquiries regarding stainless steel, please contact Yang Chaoxing at 021-20707860 or 13585549799 (WeChat available).

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