SS futures fell to the 12,700 level spot transactions were sluggish and prices pulled back [SMM Stainless Steel Daily Review]

SMM, August 22. The SS futures showed a further pullback trend. The decline in futures has not yet stopped, with prices fluctuating downward during the day, hitting a low of 12,700 yuan/mt. In the spot market, the continued decline in futures has led to cautious wait-and-see sentiment among downstream end-users, who mostly maintain just-in-time procurement. Under the pressure to sell, traders have further lowered their spot quotes. This week, social inventory decreased further, down 0.02% WoW to 933,400 mt.

In the futures market, the most-traded contract 2510 declined. At 10:30 am, SS2510 was quoted at 12,745 yuan/mt, down 45 yuan/mt from the previous trading day. The spot premiums and discounts for 304/2B in Wuxi were in the range of 325-525 yuan/mt. In the spot market, the average price for 201/2B cold-rolled coils in Wuxi was 8,000 yuan/mt; the average price for 304/2B cold-rolled coils with trimmed edges in Wuxi and Foshan was 13,000 yuan/mt; the average price for 316L/2B cold-rolled coils in Wuxi and Foshan was 25,475 yuan/mt; the average price for 316L/NO.1 hot-rolled coils in both regions was 24,900 yuan/mt; the average price for 430/2B cold-rolled coils in Wuxi and Foshan was 7,350 yuan/mt.

Recently, the SS futures have been continuously falling, erasing all gains made within the month, essentially pulling back to the level at the end of July, with the low point reaching the key level of 12,700 yuan/mt. As a result, the spot market has also weakened. The downstream market had already shown low acceptance of the previous high prices, and with the significant correction in futures, as well as traders offering discounts under the pressure to sell, spot quotes have fallen. However, even with lower prices, there has been no effective boost in transactions, as the market generally exhibits a "rush to buy amid continuous price rise and hold back amid price downturn" mentality, leading to a more pronounced wait-and-see sentiment and further deterioration in transaction volumes. However, as we approach the traditional peak season of September-October, stainless steel mills have slightly cut production, and actual production schedules may be slightly lower than expected. Recently, stainless steel social inventory has seen a seven-week consecutive decline, and with the prices of raw materials such as nickel and chromium rising, along with expectations for US Fed interest rate cuts in September, and the support of the national "anti-rat race" policy, it is unlikely that stainless steel prices will fall significantly further.