Sluggish market transactions persist, stainless steel prices in the doldrums [SMM Stainless Steel Daily Review]

SMM reported on May 20 that today, China's LPR saw its first cut this year, with a reduction of 10 basis points. However, this positive development failed to boost the SS futures market, which instead showed a downward trend. The spot market also came under significant pressure, with the pullback in futures prices triggering heightened caution in the market. Since last Friday, market trading activity has declined notably, intensifying sales pressure on traders. According to feedback from some traders, sales performance in May has been poor, with some companies only completing their April shipment tasks last week. As month-end approaches and the cargo pick-up period for May orders nears, traders are adopting a profit-concession strategy to facilitate shipments and alleviate sales pressure.

In the futures market, the most-traded 2507 contract declined. At 10:30 a.m., SS2507 was quoted at 12,860 yuan/mt, down 115 yuan/mt from the previous trading day. In the Wuxi region, the spot premiums/discounts for 304/2B ranged from 360-610 yuan/mt. In the spot market, the cold-rolled 201/2B coils in Wuxi and Foshan were both quoted at 8,100 yuan/mt; the average price of cold-rolled trimmed 304/2B coils was 13,175 yuan/mt in Wuxi and 13,175 yuan/mt in Foshan; the cold-rolled 316L/2B coil was priced at 23,875 yuan/mt in Wuxi and 23,875 yuan/mt in Foshan; the hot-rolled 316L/NO.1 coil was quoted at 23,100 yuan/mt in both regions; and the cold-rolled 430/2B coil was priced at 7,500 yuan/mt in both Wuxi and Foshan.

The influence of macro policy factors, which frequently disrupted the market in the early stage, has gradually weakened, and the market has returned to a supply-and-demand-driven logic. Despite stainless steel prices being at a low level in recent years and facing resistance to further declines, the industry's high-supply pattern remains unchanged, with stainless steel production continuing to fluctuate at highs and social inventory remaining elevated. Additionally, with the end of the traditional peak consumption season, downstream demand is weak. Coupled with recent increased price volatility, the market is characterized by a strong wait-and-see sentiment, significantly increasing the pressure on traders to ship goods. Meanwhile, the prices of key raw materials such as high-grade NPI and high-carbon ferrochrome continue to weaken, providing insufficient cost support. If there are no new favourable macro developments to boost the market, stainless steel prices may continue to be in the doldrums amid a high-supply and weak-demand pattern.