SS Futures Fluctuate Considerably, Stainless Steel Market Adopts Cautious Wait-and-See Approach with Weak Transactions [SMM Stainless Steel Daily Report]

SMM September 5: SS futures fluctuated considerably, first falling then rising. Approaching the night session close, influenced by the decline in ferrous metals series, bears significantly increased their positions in stainless steel futures, causing futures prices to plummet, briefly approaching 12,600 yuan/mt. However, after the daytime session opened, the market gradually regained rationality, with futures rebounding and ultimately closing at 12,850 yuan/mt. Spot market-wise, stainless steel transactions this week remained significantly affected by SS futures' fluctuations. Early in the week, driven by the surge in futures and rising steel mill prices, spot offers followed upward, with active inquiries and transactions fueled by the sentiment of rushing to buy amid continuous price rise and holding back amid price downturn. However, mid-week, as futures pulled back, spot transactions weakened again. Despite spot traders' reluctance to budge on prices, transaction pressures led them to offer discounts to boost sales. The significant volatility in futures, coupled with delayed implementation of macro tailwinds and slower-than-expected downstream demand recovery, dampened bullish sentiment in the stainless steel market.

Futures-wise, the most-traded contract 2510 weakened and pulled back. At 10:30 AM, SS2510 traded at 12,740 yuan/mt, down 140 yuan/mt from the previous session. In Wuxi, 304/2B spot premiums/discounts ranged between 430-730 yuan/mt. In the spot market, Wuxi’s 201/2B cold-rolled coils averaged 8,100 yuan/mt; 304/2B cold-rolled coils (trimmed) averaged 13,150 yuan/mt in both Wuxi and Foshan; 316L/2B cold-rolled coils were priced at 25,825 yuan/mt in both regions; 316L/NO.1 hot-rolled coils were quoted at 25,300 yuan/mt in both locations; 430/2B cold-rolled coils were uniformly priced at 7,550 yuan/mt in Wuxi and Foshan.

This week, the market officially entered the September-October peak season, a traditional high-consumption period, with generally strong expectations in the stainless steel industry. Although transactions remained heavily influenced by futures volatility, overall demand improved significantly compared to earlier periods. Social inventory of stainless steel declined for the ninth consecutive week, returning to February levels. Additionally, rising prices of high-carbon ferrochrome and high-grade NPI further pushed up stainless steel production costs. However, driven by optimistic expectations, planned stainless steel production in September is expected to increase further, posing challenges to downstream end-users' absorption capacity. Meanwhile, the market remains heavily influenced by macro policies and futures, with lingering uncertainties. The subsequent trend will depend on the pace of demand recovery and the actual realization of macro tailwinds.