SS Slightly Recovers, Testing 12,700; Stainless Steel Spot Enquiries Increase, Offers Explore Upside [SMM Stainless Steel Daily Review]

SMM October 21, SS futures showed a clear pattern of holding up well. Driven by the overall rise in metal futures, SS futures surged strongly, hitting an intraday high of 12,700 yuan/mt. In the spot market, boosted by the strength in SS futures, inquiry activity recovered somewhat during the day, market confidence improved, and spot traders raised their offers accordingly. Although the market remained cautious about high prices, transactions improved with minor concessions.

Futures side, the most-traded contract 2512 held up well. At 10:30 a.m., SS2511 was quoted at 12,665 yuan/mt, up 35 yuan/mt from the previous trading day. In Wuxi, spot 304/2B premiums/discounts were in the range of 355-655 yuan/mt. In the spot market, the average price for cold-rolled 201/2B coil in Wuxi was 8,000 yuan/mt; for cold-rolled 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, 25,500 yuan/mt, and in Foshan 25,500 yuan/mt; for hot-rolled 316L/NO.1 coil, both locations reported 24,950 yuan/mt; for cold-rolled 430/2B coil, both Wuxi and Foshan reported 7,600 yuan/mt.

Despite the traditional September-October peak season for consumption, stainless steel planned production for October increased further and is expected to approach 3.45 million mt again. However, the recovery in downstream end-use demand fell short of expectations, and market purchase transactions remained sluggish, causing stainless steel inventory to end its previous destocking trend. Social inventory rose significantly during the week, reaching 950,000 mt. On the cost side, affected by the weak stainless steel market, high-grade NPI prices pulled back due to weak trader confidence and increased willingness to sell. The previous tight supply of high-carbon ferrochrome eased, and with ferrochrome producers still maintaining good profit margins, prices softened at high levels. Currently, the stainless steel spot market remains influenced by macro factors and futures price fluctuations driven by capital flows. The China-US trade friction, expectations for US Fed interest rate cuts, and policy guidance from the domestic Fourth Plenary Session of the 20th Central Committee all create significant uncertainty for the market. Going forward, close attention should be paid to changes in the macro environment and stainless steel demand conditions.