The Peak Season in September Arrives Coupled with Favorable Macro Expectations, SS Futures Hold Up Well [SMM Stainless Steel Futures Weekly Review]

SMM data showed that the most-traded SS futures contract held up well this week. As of 10:30 on September 12, the SS2511 contract was quoted at 12,960 yuan/mt, up 220 yuan/mt WoW.

From a macro perspective, the US Bureau of Labor Statistics released the latest data on September 10, showing that the US Producer Price Index (PPI) unexpectedly fell MoM in August due to a decline in service prices. This further strengthened market expectations for a US Fed interest rate cut in September, with the probability of a 25-basis-point cut now exceeding 90%. On September 11, the US seasonally adjusted CPI MoM reading for August came in at 0.4%, the highest since January, above market expectations and the previous reading of 0.3%. Although core CPI remained stable, the number of initial jobless claims in the US for the week ending September 6 reached 263,000, the highest since the week of October 23, 2021, indicating weakness in the labor market and maintaining a high likelihood of a US Fed interest rate cut in September. Meanwhile, China's National Bureau of Statistics (NBS) also released data on the 10th, noting that the national Consumer Price Index (CPI) fell 0.4% YoY in August, while remaining stable MoM. Excluding the impact of food and energy prices, core CPI rose 0.9% YoY, marking the fourth consecutive month of expanding growth. This indicates overall stability in the domestic consumer market, though the foundation for domestic demand recovery still requires further consolidation. Notably, the upcoming US Fed September policy meeting is scheduled for September 16–17, with a high probability of a 25-basis-point rate cut, and expectations for two or more additional cuts by year-end. These policy developments warrant close attention, as their impact on global capital markets cannot be overlooked.

From a fundamental perspective, despite the market entering the traditional September-October peak season for consumption and expectations for US Fed interest rate cuts drawing nearer, providing room for domestic moderately accommodative monetary policy, market expectations for stainless steel prices this month remain generally strong. Social inventory of stainless steel has now declined for the ninth consecutive week, with inventory levels nearing 900,000 mt, pulling back to early-year levels, easing market destocking pressure. Prices of stainless steel furnace charge raw materials, nickel and chromium, remain strong, providing solid cost support for stainless steel. However, macro tailwinds have yet to materialize, uncertainty risks persist, and the market maintains a heavy wait-and-see sentiment. Recently, SS futures have also shown insufficient upward momentum, with the key 13,000 yuan/mt level that previously constrained futures remaining unbroken. Downstream end-users show low acceptance of high-priced spot cargo, making it difficult for stainless steel spot prices to probe higher. The subsequent trend will depend on the pace of demand recovery and the actual realization of macro tailwinds.