Weak demand for stainless steel persists during off-season, with limited market absorption capacity and prices hovering at low levels [SMM Stainless Steel Daily Review]

SMM News on June 12: Today, the SS futures market oscillated around the 12,600 yuan/mt threshold. Despite stainless steel mills resuming price-limiting strategies, market prices have trended downward, with overall quotes remaining low. During the volatile price movements of the previous two days, the market concentrated on trading low-priced cargoes. Today, as ultra-low-priced cargoes gradually disappeared, trading returned to mediocre levels. The low prices during the week prompted traders to replenish their stocks, driving social inventory to a peak, approaching 1 million mt once again, adding significant pressure to the subsequent destocking of stainless steel inventory.

In the futures market, the most-traded 2508 contract oscillated. At 10:30 a.m., SS2508 was quoted at 12,605 yuan/mt, up 100 yuan/mt from the previous trading day. In the Wuxi region, the spot premiums/discounts for 304/2B stainless steel ranged from 365-565 yuan/mt. In the spot market, cold-rolled 201/2B coils in Wuxi and Foshan were both quoted at 7,800 yuan/mt; cold-rolled mill-edge 304/2B coils had an average price of 12,925 yuan/mt in Wuxi and the same in Foshan; cold-rolled 316L/2B coils were priced at 24,000 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; cold-rolled 430/2B coils were priced at 7,500 yuan/mt in both Wuxi and Foshan.

Currently, the stainless steel market is mired in the traditional consumption off-season, with downstream demand remaining sluggish. Despite enterprises generally facing losses, some steel mills have implemented production cuts. However, due to the large production base in the early stage, current supply remains at historically high levels, with a prominent oversupply contradiction in the market. The pressure on stainless steel mills and agents to sell has surged, and market pessimism has spread. Traders are competing to sell, pushing stainless steel quotes continuously lower. The raw material side is also under pressure. Affected by expectations for production cuts at steel mills, the upward movement of high-grade NPI prices has been hindered; high-carbon ferrochrome prices continue to decline, further weakening the cost support for stainless steel. If the subsequent production cut efforts fall short of expectations, against the backdrop of weak demand in the off-season, the short-term pattern of stainless steel prices in the doldrums is unlikely to reverse.