Price Reduction by Proxy Traders During Dragon Boat Festival, Weak Stainless Steel Market Unlikely to Change [SMM Stainless Steel Daily Review]

SMM reported on June 3 that today, the SS futures market continued its weak trend, with prices briefly falling below the 12,600 yuan/mt threshold during the session. During the Dragon Boat Festival holiday, news emerged that an agent of a steel mill in South China had lowered the prices of 304 cold-rolled and hot-rolled stainless steel, with the 304 hot-rolled prices quickly following suit. Despite the 304 cold-rolled prices remaining above the previous mainstream transaction prices after the adjustment, market quotes temporarily stabilized. However, this news severely dampened market confidence. Consequently, on the first trading day after the Dragon Boat Festival holiday, market transactions continued to be sluggish, with overall performance remaining weak.

In the futures market, the most-traded 2507 contract was in the doldrums. At 10:30 a.m., SS2507 was quoted at 12,700 yuan/mt, down 10 yuan/mt from the previous trading day. In the Wuxi region, the spot premiums/discounts for 304/2B stainless steel ranged from 470-670 yuan/mt. In the spot market, the cold-rolled 201/2B coils in Wuxi and Foshan were both quoted at 7,950 yuan/mt; the average price for cold-rolled trimmed 304/2B coils was 13,100 yuan/mt in Wuxi and the same in Foshan; the cold-rolled 316L/2B coil was quoted at 24,050 yuan/mt in both Wuxi and Foshan; the hot-rolled 316L/NO.1 coil was quoted at 23,350 yuan/mt in both regions; and the cold-rolled 430/2B coil was quoted at 7,500 yuan/mt in both Wuxi and Foshan.

Currently, the stainless steel market has fully entered the traditional consumption off-season, with downstream demand remaining persistently weak. Although stainless steel production has declined since March, it still remains at historically high levels, leading to a significant surplus in market supply and high social inventory. At this stage, market transactions are mainly concentrated on low-priced warrant cargoes, with non-standard high-priced cargoes primarily subject to just-in-time procurement, resulting in low overall trading activity. Despite stainless steel enterprises generally facing losses and multiple steel mills having announced production cuts, these measures have yet to effectively boost the spot market amid the dual pressures of weakening market demand and high inventory. From the raw material side, affected by expectations for production cuts at stainless steel mills, high-grade NPI prices struggle to rise, while high-carbon ferrochrome prices have already shown a pullback, continuously weakening the cost support for stainless steel. If subsequent production cuts fall short of expectations, against the backdrop of the consumption off-season, stainless steel prices may continue to remain weak in the short term.