Weak Stainless Steel Consumption and Sluggish Trading Volume Make It Difficult for Prices to Rebound from Low Levels [SMM Stainless Steel Daily Review]

SMM reported on May 26 that today, the SS futures market held up well, but overall, it remained within a historically low range. On the news front, US President Trump announced that starting June 1, a 50% tariff would be imposed on EU imports, and a warning was issued to mobile phone manufacturers such as Apple and Samsung to "produce in the US or face a 25% tariff." Although this tariff policy has not directly affected China yet, the uncertainty in external market demand has increased. In the spot market, the previous sluggish trading pattern persisted. However, as the price of high-grade NPI stopped falling and began to rebound, the expectation of further decline in stainless steel prices weakened. The intensified competition between bulls and bears led to a temporary stabilization of spot prices.

The most-traded 2507 futures contract fluctuated upward slightly. As of 10:30 a.m., it was quoted at 12,860 yuan/mt, down 35 yuan/mt from the previous trading day. In the Wuxi region, the spot premiums/discounts for 304/2B remained at 360-560 yuan/mt. The quoted prices for cold-rolled 201/2B coils in both Wuxi and Foshan were 8,000 yuan/mt. The average price for cold-rolled trimmed 304/2B coils was 13,175 yuan/mt, the quoted price for cold-rolled 316L/2B coils was 24,050 yuan/mt, the quoted price for hot-rolled 316L/NO.1 coils was 23,550 yuan/mt, and the quoted price for cold-rolled 430/2B coils was 7,500 yuan/mt.

Currently, the stainless steel market has entered the traditional consumption off-season, with significantly weak downstream demand. However, the supply side continues to maintain a high level of production. Stainless steel mills are under immense pressure to sell their products, and there is a notable backlog of inventory among agent traders, with social inventory continuing to fluctuate at highs. Due to insufficient downstream end-user orders, some futures-to-spot traders sold spot cargo at low prices after completing arbitrage in the futures market. Some goods only circulated within the trading sector and failed to reach end-users. Despite the rebound in high-grade NPI prices, the historically low stainless steel prices, and the support provided by corporate losses, in the context of shrinking off-season demand and an unchanged high-supply pattern, if the selling pressure persists, stainless steel prices will still face downward pressure in the short term.