Weak stainless steel transactions and supply surplus lead to lower prices under shipping pressure [SMM Stainless Steel Daily Review]

SMM reported on June 9 that today, the SS futures market continued its weak performance, with the daytime session opening below the 12,600 yuan/mt threshold. The spot market also remained sluggish. Entering the traditional consumption off-season, downstream purchase willingness continued to weaken, with just-in-time procurement dominating. Despite an overall decline in stainless steel production in June, it remained at historically high levels, and the market's loose supply situation persisted. Affected by persistently sluggish transactions, multiple steel mills lowered their ex-factory prices in the afternoon, further driving down the overall spot stainless steel market prices.

In the futures market, the most-traded contract 2507 was in the doldrums. At 10:30 a.m., SS2507 was quoted at 12,655 yuan/mt, down 45 yuan/mt from the previous trading day. In the Wuxi region, the spot premiums/discounts for 304/2B were in the range of 465-665 yuan/mt. In the spot market, cold-rolled 201/2B coils in Wuxi and Foshan were both quoted at 7,850 yuan/mt; cold-rolled trimmed 304/2B coils had an average price of 13,050 yuan/mt in Wuxi and the same in Foshan; cold-rolled 316L/2B coils were priced at 24,050 yuan/mt in Wuxi and the same in Foshan; hot-rolled 316L/NO.1 coils were quoted at 23,350 yuan/mt in both regions; and cold-rolled 430/2B coils were both priced at 7,500 yuan/mt in Wuxi and Foshan.

Currently, the stainless steel market has fully entered the traditional consumption off-season, with sustained weakness in downstream demand. Despite stainless steel enterprises generally facing losses, some steel mills have also launched production cut plans. However, due to the large production base in the early stage, the current supply scale remains at historically high levels, resulting in a significant oversupply in the market. Traders are facing increased pressure to sell, and to alleviate inventory pressure, some merchants have been forced to offer discounts for sales promotions, further strengthening the market's bearish expectations. On the raw material side, affected by expectations for production cuts at stainless steel mills, high-grade NPI prices struggle to rise; at the same time, high-carbon ferrochrome prices continue to pull back, weakening the cost support for stainless steel. If the subsequent production cuts by stainless steel mills fall short of expectations, amid weak demand during the consumption off-season, stainless steel prices may continue to remain in the doldrums in the short term.