SS futures pulled back during the week, dragging down spot transactions [SMM Stainless Steel Futures Weekly Review]

SMM data showed that the most-traded SS contract exhibited a downward pullback trend this week. As of 10:30 on August 22, the SS2510 contract was quoted at 12,745 yuan/mt, down 2,450 yuan/mt WoW.

From a macro perspective, on August 19 local time, the US Department of Commerce announced the inclusion of 407 product categories into the steel and aluminum tariff list, with an applicable tax rate of 50%. The statement emphasized that the new list covers a wide range, including hundreds of products such as wind turbines and their components, mobile cranes, railway vehicles, furniture, compressors, and pump equipment. This move further escalated global trade tensions, dampening market expectations for metal demand and indirectly impacting the stainless steel export market. Additionally, the rebound in US CPI and PPI data highlighted the resilience of inflation, cooling expectations for a US Fed interest rate cut in September, leading to a stronger US dollar, which in turn suppressed the prices of commodities denominated in dollars. Meanwhile, China's LPR quotes (for 5-year and 1-year terms) remained unchanged in August, with the central bank maintaining a moderately loose monetary policy to support economic recovery, but the short-term boost to stainless steel demand was limited.

Fundamentally, the downstream sector of stainless steel has been reluctant to accept high-priced goods. With the SS futures continuously declining during the week, it dragged down the spot market, causing stainless steel spot prices to fall, erasing most of the gains made within the month. As prices dropped, the market's rush to buy amid continuous price rise and hold back amid price downturn intensified, resulting in weak transactions. End-users mainly purchased based on rigid demand. Currently, the market has not yet shown signs of the September-October peak season, and with stainless steel mills expecting an increase in production schedules for August, the pressure to destock has increased. Future trends will still require close attention to macro tailwinds and the specific situation of demand recovery.