Macro Pressures and Supply-Demand Imbalance Stainless Steel Futures Operate Under Pressure in the Short Term [SMM Stainless Steel Futures Weekly Review]

SMM data showed that the most-traded SS futures contract hit bottom and then recovered this week. As of 10:30 on October 17, the SS2512 contract was quoted at 12,615 yuan/mt, down 220 yuan/mt WoW.

Macro perspective, on October 11, Trump announced plans to impose an additional 100% tariff on Chinese goods and restrict exports of key software starting November 1. The news quickly triggered a sell-off in global risk assets, with metal futures prices falling, and stainless steel futures also opened lower under pressure. On the 14th, China, as a countermeasure, imposed a "special port fee" on US-flagged vessels, further escalating maritime friction and pushing up transportation costs. Subsequently, US Vice President Vance released signals of easing, stating that Trump was willing to engage in "rational negotiations," yet market uncertainty remained high. Fed Chairman Powell noted that since the September meeting, the economic outlook had not changed significantly, downside risks to employment were evident, and the Fed might be close to stopping balance sheet reduction. There were signs that liquidity was tightening, and the US Fed would proceed cautiously to avoid a repeat of the 2019 "taper tantrum." Affected by this, SS futures showed signs of stabilizing and recovering.

Fundamentally, despite the traditional consumption peak season of September-October, stainless steel planned production surged in October, expected to approach 3.45 million mt again. However, the recovery in end-use demand fell short of expectations, with market purchases and transactions remaining sluggish, leading to a halt in the previous destocking trend for stainless steel. Social inventory rose significantly during the week, reaching 950,000 mt. Cost side, affected by weak stainless steel market conditions, high-grade NPI prices pulled back due to weakened trader confidence and increased willingness to sell. The previous tight supply of high-carbon ferrochrome eased, and prices showed signs of softening at high levels as ferrochrome producers maintained good profit margins. Currently, the stainless steel spot market remains influenced by macro factors and futures price fluctuations driven by capital flows. US-China trade friction, expectations for US Fed interest rate cuts, and policy guidance from China's upcoming Second Plenary Session of the 20th Central Committee all contribute to significant market uncertainty. Going forward, close attention is needed on changes in the macro environment and stainless steel demand conditions.