Macro Warmth Can't Conceal Weak Demand, Stainless Steel Prices Still Lack Momentum for Upswing 【SMM Analysis】

SMM data shows that the most-traded SS contract exhibited a fluctuating trend that held up well this week. As of 10:30 a.m. on May 9, the SS2506 contract was quoted at 12,710 yuan/mt, up 55 yuan/mt WoW.

Macro perspective, multiple factors jointly influenced market expectations. On May 8, the People's Bank of China announced a 0.5 percentage point cut in the reserve requirement ratio (RRR) for financial institutions, with an even more significant 5 percentage point reduction for auto finance companies and financial leasing companies. This policy will significantly release market liquidity, expected to stimulate investment in infrastructure and manufacturing, thereby indirectly boosting expectations for stainless steel demand. Meanwhile, news of China-US tariff negotiations, coupled with the US Fed's hawkish stance, prompted signs of a bottom-out rebound in SS futures.

On the fundamental side, despite the favourable macro front triggering market sentiment to explore price increases, the weak downstream demand situation remained unchanged. After the Labour Day holiday, although the market briefly experienced a small peak in procurement, demand quickly returned to mediocre levels after being temporarily satisfied. Additionally, as the price of high-grade NPI pulled back, the losses pressure on stainless steel mills eased somewhat, weakening the cost support for prices.

Overall, current macro policies are generally supportive, but tariff uncertainties persist. Although stainless steel prices are already at low levels and there are bullish expectations in the market, downstream enterprises remain cautious in their procurement mindset, with weak demand still being the main factor constraining market upward momentum. It is expected that in the short term, stainless steel prices will lack clear upward momentum.