Off-season for stainless steel arrives, supply remains high, and weak transactions are difficult to improve [SMM Stainless Steel Daily Review]

SMM reported on May 27 that today, the SS futures market exhibited a rangebound fluctuation. Despite the significant decline in futures prices for ferrous metals series products such as rebar and HRC in recent times, the stainless steel futures market remained relatively stable, showing no significant impact. In the spot market, trading activity remained sluggish today, with transactions predominantly concluded at lower prices. Currently, the stainless steel market has entered the consumption off-season. However, the decline in stainless steel production this month has not been significant, making it difficult to achieve a balance between production and end-use consumption demand. Moreover, with social inventory already at high levels, traders are facing substantial sales pressure. To recoup funds, they have adopted a strategy of offering discounts to facilitate sales, leading to a weakening trend in stainless steel spot prices.

In the futures market, the most-traded 2507 contract fluctuated. At 10:30 a.m., SS2507 was quoted at 12,835 yuan/mt, down 25 yuan/mt from the previous trading day. In the Wuxi region, the spot premiums/discounts for 304/2B stainless steel ranged from 385-585 yuan/mt. In the spot market, the cold-rolled 201/2B coil was quoted at 7,975 yuan/mt in both Wuxi and Foshan. The average price for cold-rolled trimmed 304/2B coil was 13,150 yuan/mt in Wuxi and the same in Foshan. The cold-rolled 316L/2B coil was priced at 24,050 yuan/mt in Wuxi and 24,050 yuan/mt in Foshan. The hot-rolled 316L/NO.1 coil was quoted at 23,350 yuan/mt in both regions. The cold-rolled 430/2B coil was priced at 7,500 yuan/mt in both Wuxi and Foshan.

Currently, the stainless steel market has entered the traditional consumption off-season, with notably weak downstream demand. However, the supply side continues to maintain high production levels, resulting in significant sales pressure for stainless steel mills. There is a notable backlog of inventory among agent traders, and social inventory remains at high levels. Due to insufficient downstream end-user orders, some futures-to-spot traders are selling spot cargo at low prices after completing arbitrage in the futures market. Some cargoes are only circulating within the trading sector and have not reached end-users. Despite the rebound in high-grade NPI prices, stainless steel prices being at historical lows, and losses incurred by enterprises providing some support, under the backdrop of shrinking off-season demand and unchanged high supply, if sales pressure persists, stainless steel prices will continue to face downward pressure in the short term.