Supply-demand imbalance coupled with high inventory, stainless steel prices continue to fluctuate at lows, maintaining the downtrend [SMM Stainless Steel Daily Review]

SMM reported on May 23 that the SS futures market continued to exhibit a volatile trend today. As macro-level disruptions gradually faded this week, market dynamics returned to being primarily driven by fundamental factors. Demand side, weakness was evident, with downstream consumption remaining sluggish, resulting in sluggish market transactions throughout the week. Supply side, stainless steel enterprises' production cuts were limited, and overall market supply remained abundant. To alleviate selling pressure, traders had to adopt profit-conceding sales promotion strategies. Meanwhile, stainless steel social inventory continued to hover at historically high levels, further exacerbating market pessimism. Under the dual pressures of supply-demand imbalance and high inventory, market participants lacked confidence in the near-term outlook, and stainless steel prices continued to operate at low levels.

In the futures market, the most-traded 2507 contract fluctuated. At 10:30 a.m., SS2507 was quoted at 12,895 yuan/mt, up 20 yuan/mt from the previous trading day. In the Wuxi region, spot premiums/discounts for 304/2B stainless steel ranged from 325 to 525 yuan/mt. In the spot market, cold-rolled 201/2B coils in both Wuxi and Foshan were quoted at 8,000 yuan/mt; cold-rolled trimmed 304/2B coils averaged 13,150 yuan/mt in Wuxi and 13,150 yuan/mt in Foshan; cold-rolled 316L/2B coils were priced at 23,975 yuan/mt in Wuxi and 23,975 yuan/mt in Foshan; hot-rolled 316L/NO.1 coils were quoted at 23,350 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 macroeconomic policies that had frequently disrupted the market in the early stage gradually dissipated, the operational logic of the stainless steel market returned to being primarily driven by supply and demand fundamentals. Currently, stainless steel prices have fallen to recent lows, and the price of high-grade NPI has stopped falling and begun to rebound, creating a certain resistance to further price declines. However, the industry's supply-demand imbalance remains acute: on the supply side, stainless steel production has consistently remained high, and social inventory has continued to soar; on the raw material front, the high-carbon ferrochrome market is expected to face a supply surplus this month, with further room for price concessions. On the demand side, the market is facing the impact of the end of the traditional peak consumption season, with downstream demand remaining sluggish. Market sentiment is cautious, and traders are under intense pressure to sell. If there is a lack of new favourable macro front stimuli in the future, under the dual squeeze of high supply and weak demand, stainless steel prices may continue to exhibit a weak trend in the short term.