Supply-demand imbalance in stainless steel demand during off-season, prices running at low levels [SMM Stainless Steel Daily Review]

SMM reported on June 13 that today, the SS futures market was in the doldrums, oscillating between 12,600 and 12,500 yuan/mt. This week, the stainless steel spot market continued to exhibit a weak performance, with a prominent supply-demand imbalance and persistently sluggish downstream demand. Earlier, steel mills implemented price-limiting measures to stabilize selling prices, but shipments were hindered, leading to a continuous accumulation of in-plant inventory and a significant increase in pressure. During the week, steel mills temporarily lifted the price limits, prompting agents and traders to cut prices and launch sales promotions, which drove stainless steel prices to plummet to a new five-year low. Although steel mills subsequently resumed price-limiting strategies, prices remained stable at low levels. The low prices during the week stimulated traders to replenish their stocks, alleviating the pressure on steel mills' in-plant inventory. However, social inventory surged, approaching 1 million mt again, and the subsequent de-stocking of stainless steel consumption still faces significant pressure.

In the futures market, the most-traded 2508 contract was oscillating. At 10:30 a.m., SS2508 was quoted at 12,540 yuan/mt, down 160 yuan/mt from the previous trading day. In the Wuxi region, the spot premiums/discounts for 304/2B were in the range of 380-630 yuan/mt. In the spot market, the cold-rolled 201/2B coils in Wuxi and Foshan were both quoted at 7,750 yuan/mt; the average price of cold-rolled trimmed 304/2B coils was 12,875 yuan/mt in Wuxi and 12,875 yuan/mt in Foshan; the cold-rolled 316L/2B coils were priced at 24,000 yuan/mt in Wuxi and 24,000 yuan/mt in Foshan; the hot-rolled 316L/NO.1 coils were quoted at 23,350 yuan/mt in both regions; and the cold-rolled 430/2B coils were both priced at 7,500 yuan/mt in Wuxi and Foshan.

Currently, the stainless steel market is mired in the traditional consumption off-season, with persistently sluggish downstream demand. Despite widespread losses among enterprises, 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, and the market oversupply is prominent. The pressure on steel mills and agents to ship goods has surged, and market pessimism has spread. Traders are scrambling to sell, pushing stainless steel quotes lower. The raw material side is also under pressure. Affected by expectations for production cuts at steel mills, the price increase of high-grade NPI has been hindered; the price of high-carbon ferrochrome has continued to decline, further weakening the cost support for stainless steel. If the subsequent production cuts fall short of expectations, against the backdrop of weak demand in the off-season, the short-term weak performance of stainless steel prices is unlikely to reverse.