The rise in SS futures drove spot cargo transactions to recover and inventory to decline [SMM Stainless Steel Futures Weekly Review]

According to SMM data, the most-traded SS contract showed signs of bottoming out and rebounding this week. As of 10:30 on July 4, the SS2508 contract was quoted at 12,750 yuan/mt, up 130 yuan/mt WoW.

Macro perspective, starting from July 1 this week, China's Ministry of Commerce continued to impose anti-dumping duties on imported stainless steel billets and hot-rolled plates/coils originating from the EU, the UK, South Korea, and Indonesia, with tariff rates ranging from 20.2% to 103.1% for a period of five years. This move aims to protect domestic industries and mitigate the impact of low-priced imports, but may exacerbate market concerns over trade frictions and dampen import substitution demand in the short term. The People's Bank of China proposed at its Q2 regular meeting to strengthen monetary policy adjustments, maintain ample liquidity, and guide credit allocation, but did not explicitly mention RRR cuts or interest rate cuts. Market expectations suggest there is still room for a 30BP interest rate cut and a 50BP RRR cut in H2 to reduce financing costs for the real economy. The US released June's non-farm payrolls data, which showed unexpectedly strong performance, completely eliminating the possibility of an interest rate cut in July.

Fundamentally, market transactions this week have shown signs of recovery and repair compared to the previous period, with social inventory declining further during the week, but still remaining at a relatively high level. Although steel mills have gradually cut production, it will still take time to deplete the previous inventory, coupled with the current off-season for consumption, further prolonging this cycle. Currently, the market's acceptance of high-priced goods remains low, with most transactions relying on low-priced goods offered by sellers at a concession.