Supply-demand mismatch in stainless steel persists, with insufficient downstream demand and sluggish transactions [SMM Stainless Steel Daily Review]

SMM reported on May 22 that today, the SS futures market continued to exhibit a fluctuating trend. As the earlier favourable macro factors gradually faded and the traditional peak consumption season neared its end, the procurement demand released by downstream end-users due to stimulus policies had largely been met. Meanwhile, the overall production cuts in the stainless steel sector remained limited, with market supply remaining high and material availability remaining loose, leading to continued sluggish trading in the spot market. To alleviate shipping pressure, agents and traders adopted a strategy of offering minor concessions. Notably, stainless steel producers had previously adjusted their production structures by reducing capacity for 300-series stainless steel and increasing output for 200-series and 400-series stainless steel, but the downstream demand structure had not changed accordingly. This led to a significant increase in the supply of 200-series stainless steel in the market, sharply escalating sales pressure. In response, Tsingshan Group lowered its 200-series stainless steel plate prices today, further reflecting the intensified supply-demand imbalance in this category.

In the futures market, the most-traded 2507 contract fluctuated slightly upward. At 10:30 a.m., SS2507 was quoted at 12,875 yuan/mt, up 5 yuan/mt from the previous trading day. In the Wuxi region, the spot premiums/discounts for 304/2B stainless steel ranged from 345-595 yuan/mt. In the spot market, cold-rolled 201/2B coils in both Wuxi and Foshan were quoted at 8,100 yuan/mt; cold-rolled trimmed 304/2B coils had an average price of 13,175 yuan/mt in Wuxi and the same in Foshan; cold-rolled 316L/2B coils were priced at 23,875 yuan/mt in Wuxi and the same in Foshan; hot-rolled 316L/NO.1 coils were quoted at 23,100 yuan/mt in both regions; and cold-rolled 430/2B coils were priced at 7,500 yuan/mt in both Wuxi and Foshan.

As the effects of macro policies that had frequently disrupted the market in the early stages gradually faded, the stainless steel market is returning to a logic dominated by supply and demand fundamentals. Currently, stainless steel prices have touched recent lows, and coupled with the stop falling and begin to rebound of high-grade NPI prices, further significant declines face certain resistance. However, the industry's supply-demand imbalance remains prominent: on the supply side, stainless steel production continues to remain high, and social inventory stays elevated; in terms of raw materials, the market expects a supply surplus of high-carbon ferrochrome this month, with room for price concessions. On the demand side, with the end of the traditional peak consumption season, downstream demand remains weak, and coupled with recent sharp price fluctuations, market sentiment is cautious, significantly increasing the shipping pressure on traders. If there is a lack of new macro-level support in the future, under the dual pressures of high supply and weak demand, stainless steel prices may continue to operate in the doldrums in the short term.