Low Prices Fail to Boost Transactions, Stainless Steel Inventory Accumulates [SMM Stainless Steel Daily Review]

SMM reported on June 5 that today, the SS futures market was in the doldrums. The spot market continued its sluggish performance from the previous period. Affected by the strong wait-and-see sentiment among downstream end-users, market transactions were dominated by just-in-time procurement. To alleviate shipping pressure, steel mill agents and traders offered discounts for sales promotions, but with little success. As steel mills lowered their list prices for 200 series stainless steel, traders followed suit by reducing their quotes. However, market activity remained unimproved, and transaction volumes remained dismal. This week, due to concentrated arrivals of goods recently, social inventory rose significantly, further exacerbating market sales pressure. The stainless steel spot market is unlikely to change its weak pattern in the short term.

In the futures market, the most-traded 2507 contract was in the doldrums. At 10:30 a.m., SS2507 was quoted at 12,690 yuan/mt, up 30 yuan/mt from the previous trading day. In the Wuxi region, the spot premiums/discounts for 304/2B were in the range of 480-680 yuan/mt. In the spot market, the cold-rolled 201/2B coils in both Wuxi and Foshan were quoted at 7,850 yuan/mt. The average price of cold-rolled mill edge 304/2B coils was 13,100 yuan/mt in Wuxi and 13,100 yuan/mt in Foshan. The cold-rolled 316L/2B coils were quoted at 24,050 yuan/mt in Wuxi and 24,050 yuan/mt in Foshan. The hot-rolled 316L/NO.1 coils were quoted at 23,350 yuan/mt in both regions. The cold-rolled 430/2B coils were 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 sustained sluggish downstream demand. Although stainless steel production has declined since March, it remains at historically high levels, resulting in a significant surplus in market supply and high social inventory. At this stage, market transactions are mainly concentrated on low-priced warrant cargoes, while non-standard high-priced cargoes are mainly subject to just-in-time procurement, with overall trading activity remaining low. Although stainless steel enterprises are generally facing losses and multiple steel mills have announced production cuts, these measures have not yet effectively boosted 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, the price of high-grade NPI struggles to rise, while the price of high-carbon ferrochrome has already shown a pullback, weakening the cost support for stainless steel. If the subsequent production cuts fall short of expectations, against the backdrop of the consumption off-season, stainless steel prices may continue to remain in the doldrums in the short term.