SS Futures Approach Nearly Three-Month Low, Stainless Steel Spot Prices Follow Decline with Sluggish Trading [SMM Stainless Steel Daily Report]

SMM October 14 - SS futures showed a significant downward correction trend. Today, futures generally moved lower, with SS futures further declining, once approaching 12,500 yuan/mt during the session, hitting a nearly three-month low. In the spot market, affected by macro factors and the decline in futures, the spot market was also impacted, with widespread pessimism about the future outlook, leading to further weakening in purchasing and transactions. Currently, the market is significantly influenced by futures, with a strong wait-and-see sentiment. Traders increased discounts, and offers continued to decline, but transactions remained sluggish.

On the futures side, the most-traded contract 2511 weakened and declined. At 10:30 a.m., SS2511 was quoted at 12,565 yuan/mt, down 75 yuan/mt from the previous trading day. In the Wuxi area, the spot premium/discount for 304/2B was in the range of 455-755 yuan/mt. In the spot market, the average price for cold-rolled 201/2B coil in Wuxi was reported at 8,050 yuan/mt; for cold-rolled edge-trimmed 304/2B coil, the average price in Wuxi was 13,000 yuan/mt, and in Foshan, 13,000 yuan/mt; for cold-rolled 316L/2B coil in Wuxi, 25,300 yuan/mt, and in Foshan, 25,300 yuan/mt; for hot-rolled 316L/NO.1 coil, both locations reported 24,750 yuan/mt; for cold-rolled 430/2B coil, both Wuxi and Foshan reported 7,600 yuan/mt.

During the National Day and Mid-Autumn Festival holidays, the domestic stainless steel market was generally on holiday, with shipments and warehouse movements restricted, and spot transactions suspended. However, LME nickel futures prices rose continuously from the middle of the holiday, boosting nickel and stainless steel futures prices and strengthening market confidence. Currently, there is a clear divergence between the fundamentals of the stainless steel market and macro expectations. From a macro perspective, the US government shutdown during the holiday increased safe-haven demand for funds, driving overall commodity futures prices higher. Additionally, expectations for two more US Fed interest rate cuts within the year generally supported commodity prices. However, stainless steel fundamentals were relatively weak. Despite being in the traditional peak consumption season of September-October, downstream demand recovery was limited, market transactions were sluggish, and social inventory showed signs of stopping declines and rebounding. Furthermore, prices of raw materials such as high-grade NPI and high-carbon ferrochrome softened, weakening cost support for stainless steel. Going forward, attention should be paid to the implementation of macro news and changes in downstream demand.