Favourable macro front fades, fundamentals dominate, sluggish trading, stainless steel market weakens [SMM Stainless Steel Daily Review]

SMM reported on May 21 that today, the SS futures market exhibited a fluctuating trend. As macro-level disruptions gradually faded, market trading logic reverted to being dominated by fundamental factors. Amid the tug-of-war between bullish and bearish forces, the market direction remained unclear in the short term. Looking back at last week, driven by favourable macro front, stainless steel spot prices strengthened significantly. Under the market psychology of "rush to buy amid continuous price rise and hold back amid price downturn," downstream procurement demand was concentrated and released. However, entering this week, the pent-up demand from the previous period has largely been met, leading to a notable decline in market trading activity and an increase in the selling pressure on traders. To boost sales, some traders opted to offer discounts, driving the overall spot prices in the doldrums.

In the futures market, the most-traded 2507 contract fluctuated upward slightly. At 10:30 a.m., SS2507 was quoted at 12,870 yuan/mt, up 10 yuan/mt from the previous trading day. In the Wuxi region, the spot premiums/discounts for 304/2B stainless steel ranged from 350-600 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.

As the effects of macroeconomic policies that frequently disrupted the market in the previous period gradually faded, the stainless steel market is returning to an operational logic dominated by supply and demand fundamentals. Currently, stainless steel prices have reached recent lows, coupled with the stop falling and begin to rebound of high-grade NPI prices, further sharp declines face certain resistance. However, the industry's supply-demand imbalance remains prominent: on the supply side, stainless steel production continues to maintain a high level, and social inventory remains elevated; in terms of raw materials, the market expects high-carbon ferrochrome to face a supply surplus this month, with room for price discounts. On the demand side, with the end of the traditional peak consumption season, downstream demand continues to be weak. Coupled with recent sharp price fluctuations, there is a strong wait-and-see sentiment in the market, significantly increasing the selling pressure on traders. If there is a lack of new macroeconomic support in the future, under the dual pressures of high supply and weak demand, stainless steel prices may continue to trend in the doldrums in the short term.