Stainless Steel Struggles to Break Free from Strong Supply and Weak Demand Situation, Futures Market Leads the Decline, Spot Cargo Follows [SMM Stainless Steel Daily Review]

SMM May 28: Today, SS futures broke the previous consolidation pattern and experienced a sharp decline, with the most-traded contract price falling below the 12,700 yuan/mt threshold again. The spot market remained sluggish, with transaction prices continuously declining due to weak downstream demand and the weakening futures market. Although production cut rumors from stainless steel mills circulated frequently today, the actual scale of cuts remains limited, and the substantial impact of supply-side reductions on the market will take time to materialize. Therefore, the stainless steel market will likely remain in the doldrums in the short term.

Futures side, the most-traded SS2507 contract dropped significantly. At 10:30 am, SS2507 was quoted at 12,750 yuan/mt, down 85 yuan/mt from the previous trading day. In Wuxi, the spot premiums/discounts for 304/2B ranged between 420-620 yuan/mt. In the spot market, the prices of cold-rolled 201/2B coils in Wuxi and Foshan were both quoted at 7,950 yuan/mt. The average prices of cold-rolled 304/2B coils with mill edges were 13,100 yuan/mt in both Wuxi and Foshan. Cold-rolled 316L/2B coils were priced at 24,050 yuan/mt in both regions, while hot-rolled 316L/NO.1 coils were quoted at 23,350 yuan/mt in both locations. Cold-rolled 430/2B coils were uniformly priced at 7,500 yuan/mt in Wuxi and Foshan.

Currently, the stainless steel market has entered the traditional consumption off-season, with significantly weak downstream demand. However, supply-side production remains high, creating substantial sales pressure for steel mills and obvious inventory buildup among agents and traders, while social inventory continues to fluctuate at highs. Due to insufficient end-user orders, some futures-spot traders sold spot cargo at low prices after completing arbitrage in the futures market, with some goods circulating only within the trade chain without reaching end-users. Although the rebound in high-grade NPI prices, historically low stainless steel prices, and corporate losses provide some support, the market still faces downward pressure in the short term amid shrinking off-season demand and unchanged high-supply conditions if sales pressure persists.