SS Futures Stop Falling and Stabilize, Futures Influence Dominates Weak Stainless Steel Spot Trading [SMM Stainless Steel Daily Review]

SMM October 15 - SS futures showed signs of stabilizing after a decline. Today, the futures market generally moved lower, with SS futures extending their losses and approaching 12,500 yuan/mt during the session, hitting a near three-month low. In the spot market, influenced by the low futures prices, spot stainless steel transactions remained sluggish. Under the pressure to sell due to concentrated price inversions after the holiday, traders frequently offered discounts. Currently, the market is significantly affected by futures, with a strong wait-and-see sentiment. As futures remain weak, spot prices are unlikely to see a significant rebound.

On the futures side, the most-traded contract 2511 weakened and declined. At 10:30 am, SS2511 was quoted at 12,565 yuan/mt, holding steady from the previous trading day. In Wuxi, 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 8,050 yuan/mt; for cold-rolled trimmed 304/2B coil, the average price in Wuxi was 13,000 yuan/mt, and in Foshan it was 13,000 yuan/mt; for cold-rolled 316L/2B coil in Wuxi, the price was 25,300 yuan/mt, and in Foshan it was 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, starting from the middle of the holiday, LME nickel futures prices rose continuously, 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 drove up overall commodity futures prices due to safe-haven demand for funds. Additionally, expectations for two more US Fed interest rate cuts within the year are generally positive for commodity prices. However, the fundamentals of stainless steel appear somewhat weak. Despite being in the traditional peak consumption season of September-October, downstream demand recovery has been limited, market transactions have been relatively sluggish, and social inventory has shown signs of stopping its decline and starting to rebound. Furthermore, prices of raw materials such as high-grade NPI and high-carbon ferrochrome have softened, leading to a weakening of cost support for stainless steel. Going forward, attention should be paid to the implementation of macro news and changes in downstream demand.