Short-Term Positive Factors Exhausted, Stainless Steel Prices Struggle to Rise [SMM Stainless Steel Daily Report]

SMM September 19, SS futures were in the doldrums. The US Fed interest rate cut was in line with market expectations, and the short-term positive effects were largely released. SS futures returned to fundamentals, remaining in the doldrums below 12,900 yuan/mt throughout the day, once approaching 12,800 yuan/mt intraday. Spot market, early this week, spot offers once rose driven by stronger SS futures and higher stainless steel mill list prices, but downstream end-users had low acceptance of high-priced stainless steel, and transactions were not ideal. Subsequently, traders offered discounts under sales pressure, and spot prices gradually pulled back. In addition, short-term macro tailwinds were largely exhausted, and the cost side lacked upward momentum, making it difficult for stainless steel spot prices to sustain gains. However, as month-end approaches, pre-holiday stockpiling demand is expected to gradually emerge. Moreover, social inventory of stainless steel fell for the 11th consecutive week, down 1.79% WoW to 897,200 mt. Although market participants felt demand was weak, downstream demand was gradually recovering during the peak season, and steel mills were still in losses, making a significant decline in stainless steel prices unlikely in the short term.

Futures, the most-traded contract 2511 was in the doldrums. At 10:30 am, SS2511 was quoted at 12,870 yuan/mt, down 90 yuan/mt from the previous trading day. Wuxi spot premiums/discounts for 304/2B were in the range of 350-650 yuan/mt. In the spot market, Wuxi cold-rolled 201/2B coil averaged 8,100 yuan/mt; cold-rolled mill-edge 304/2B coil averaged 13,200 yuan/mt in Wuxi and 13,200 yuan/mt in Foshan; cold-rolled 316L/2B coil was 25,750 yuan/mt in Wuxi and 25,750 yuan/mt in Foshan; hot-rolled 316L/NO.1 coil was 25,150 yuan/mt in both locations; cold-rolled 430/2B coil was 7,600 yuan/mt in both Wuxi and Foshan.

Although it is the traditional September-October peak season, and downstream end-use demand for stainless steel has indeed recovered compared to earlier periods, stainless steel market has not shown a significant strengthening trend due to simultaneous increase in steel mill production this month. Market participants generally felt the overall atmosphere was sluggish, and the market did not show the vibrant trading scene expected during the peak season. Although inventory gradually declined, stainless steel spot prices struggled to rise. This week, the US Fed officially cut interest rates by 25 basis points, in line with previous market expectations. SS futures had already struggled to break through the previous bottleneck of 13,000 yuan/mt, and after short-term macro tailwinds were realized, futures turned downward. Downstream spot market had low acceptance of high prices, and the decline in futures prices further intensified wait-and-see sentiment. In addition, further increases in raw material costs for nickel and chromium also faced resistance. Although stainless steel prices are unlikely to decline significantly in the short term due to the traditional peak season, low social inventory, and pre-holiday stockpiling demand ahead of the National Day holiday, the momentum for further price increases has clearly weakened.