Stainless steel prices rise slightly, but trading remains weak. The spot market is significantly influenced by the futures market [SMM Stainless Steel Daily Review]

SMM reported on July 11 that the SS futures market ended its previous upward trend and weakened, pulling back, with intraday prices once falling below 12,700 yuan/mt. In the spot market, spot prices rose in the morning due to the previous day's strength in the futures market. However, as transactions remained sluggish and the futures market weakened today, stainless steel spot prices pulled back again. This week, the stainless steel spot market was significantly influenced by the futures market. The fundamental supply-demand situation did not undergo a fundamental change, with downstream end-users maintaining a cautious wait-and-see sentiment, focusing on just-in-time procurement. Part of the stainless steel transactions were driven by arbitrage operations in the futures market by spot-futures traders, and the goods did not actually flow to the end-use consumption sector. This week, stainless steel social inventory climbed again, rising 1.31% WoW, reaching 990,800 mt, and the inventory pressure in the market remained significant.

In the futures market, the most-traded 2508 contract fell. At 10:30 a.m., SS2508 was quoted at 12,755 yuan/mt, down 70 yuan/mt from the previous trading day. In Wuxi, the spot premiums/discounts for 304/2B stainless steel ranged from 65 to 265 yuan/mt. In the spot market, cold-rolled 201/2B coils in Wuxi and Foshan were both quoted at 7,500 yuan/mt; cold-rolled mill-edge 304/2B coils had an average price of 12,750 yuan/mt in Wuxi and the same in Foshan; cold-rolled 316L/2B coils were priced at 23,700 yuan/mt in Wuxi and the same in Foshan; hot-rolled 316L/NO.1 coils were quoted at 23,200 yuan/mt in both cities; and cold-rolled 430/2B coils were both priced at 7,100 yuan/mt in Wuxi and Foshan.

Despite the SS futures market stopping its decline and rebounding, with prices strengthening, the stainless steel spot market fundamentals have not yet significantly reversed. The current market is still in the traditional consumption off-season, with the summer heat further weakening some downstream demand. Although previous news of production cuts by steel mills boosted market confidence and improved the sluggish transaction situation, the inventory pressure on stainless steel remains significant. In-plant inventory, front-end warehouse inventory, and social inventory of stainless steel mills are all at relatively high levels, and the slow pace of inventory reduction during the consumption off-season has delayed the repair process of the supply-demand relationship. Affected by expectations for production cuts by stainless steel mills, the procurement price of high-grade NPI has further declined, pushing down the cost support for stainless steel. In summary, the current stainless steel market is facing multiple pressures from large inventory, weak demand, and weakened cost support, and the repair of the supply-demand relationship still requires time.