Futures drive spot cargo prices up, and inquiries in the stainless steel market have recovered [SMM Stainless Steel Daily Review]

Published: Jul 2, 2025 16:50

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[SMM Stainless Steel Daily Review: Futures Drive Spot Prices Up, Inquiries in Stainless Steel Market Recover Slightly] SMM reported on July 2 that, influenced by the increasingly clear expectations for US Fed interest rate cuts, the SS futures market stopped falling and rebounded again, with the intraday high approaching 12,700 yuan/mt. In the spot market, thanks to the boost from the futures market, traders' quotes generally strengthened in the morning. The relatively low quotes from yesterday had basically disappeared, and market inquiries also recovered slightly. Despite relatively small changes in the fundamentals, downstream cautious wait-and-see sentiment had not yet fully dissipated, and the degree of recovery in actual transactions was not ideal. However, driven by the concessions of some traders, the transaction situation had also slightly improved compared to previous days. Currently, although stainless steel prices are at a low level and steel mills are facing losses and production cuts, the in-plant inventory and social inventory of stainless steel mills remain high. The repair of the market supply-demand relationship still takes time, and it is difficult for the fundamentals to change significantly in the short term. The market is in a stalemate, and spot prices are mostly driven by the changes in the futures market. In terms of futures, the most-traded contract 2508 strengthened and rose. At 10:30 a.m., SS2508 was quoted at 12,635 yuan/mt, up 115 yuan/mt from the previous trading day. In the Wuxi area, the spot premiums/discounts for 304/2B stainless steel ranged from 135-335 yuan/mt. In the spot market, the cold-rolled 201/2B coils in Wuxi and Foshan were both quoted at 7,625 yuan/mt; the cold-rolled trimmed 304/2B coils had an average price of 12,700 yuan/mt in Wuxi and 12,700 yuan/mt in Foshan; the cold-rolled 316L/2B coils were priced at 23,800 yuan/mt in Wuxi and 23,800 yuan/mt in Foshan; the hot-rolled 316...

SMM July 2 news: Driven by increasingly clear expectations for US Fed interest rate cuts, SS futures rebounded again after stopping the decline, with intraday highs approaching 12,700 yuan/mt. Spot market-wise, buoyed by the futures market, morning trader quotations generally strengthened, with yesterday's lower offers largely disappearing. Market inquiries also showed signs of recovery. Although fundamentals changed little and downstream cautious wait-and-see sentiment persisted, actual transaction recovery remained unsatisfactory. However, with some traders offering concessions, transaction activity improved slightly compared to previous days. Currently, despite low stainless steel prices and steel mills facing losses and production cuts, in-plant inventory and social inventory remain at high levels. Market supply-demand relationship recovery will take time, with fundamentals unlikely to change significantly in the short term. The market remains locked in a stalemate, with spot prices largely driven by futures market fluctuations.

Futures-wise, the most-traded contract 2508 strengthened. At 10:30 am, SS2508 traded at 12,635 yuan/mt, up 115 yuan/mt from the previous trading day. In Wuxi, 304/2B spot premiums/discounts ranged between 135-335 yuan/mt. In the spot market, cold-rolled 201/2B coils in Wuxi and Foshan both quoted at 7,625 yuan/mt; cold-rolled 304/2B coils with mill edges averaged 12,700 yuan/mt in both cities; Wuxi's cold-rolled 316L/2B coils traded at 23,800 yuan/mt, matching Foshan's price; hot-rolled 316L/NO.1 coils quoted at 23,100 yuan/mt in both locations; cold-rolled 430/2B coils in Wuxi and Foshan both stood at 7,250 yuan/mt.

Currently, the stainless steel market remains in the traditional off-season, with downstream demand failing to match current supply levels. Additionally, uncertainties like US tariffs remain significant, fostering strong downstream wait-and-see sentiment. Although stainless steel mills generally face cost losses and production cut news has emerged, massive prior production volumes keep current market supply at historically high levels. Supply-demand rebalancing will require time. Both mill inventories and social inventories remain at relatively high levels, with destocking slowing markedly during the off-season, placing substantial sales pressure on mills, agents, and traders, thereby limiting stainless steel price rebounds. Raw material side also faces heavy pressure. Affected by mill production cut expectations, only high-carbon ferrochrome maintains stable tender prices due to overseas producer reductions, though retail prices already trail tender levels. Prices of other raw materials, such as high-grade NPI and stainless steel scrap, have also weakened significantly, further eroding the cost support for stainless steel. The market is waiting to see how the supply-demand relationship will recover after stainless steel mills implement production cuts.

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

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