SS Futures Rise Fails to Alter Weak Fundamentals, Stainless Steel Spot Prices See Limited Gains [SMM Stainless Steel Daily Report]

SMM October 24 news, SS futures continued their previous upward trend and strengthened further. Although ferrous metals futures weakened today, SHFE nickel surged significantly, and SS followed the upward trend to test higher levels, holding up well above 12,800 yuan/mt intraday. Spot market side, boosted by the further rise in SS futures intraday, spot market confidence recovered somewhat, and offers moved higher. However, downstream demand side showed limited acceptance of the price increases, and transactions still relied on discounts from traders. Although futures prices rose successively during the week, their driving effect on stainless steel spot prices was relatively limited. Insufficient confidence on the consumption side and weak fundamentals continued to weigh on the spot market, leaving limited upward momentum for stainless steel spot prices. This week, social inventory dropped back slightly, down 0.65% WoW to 946,400 mt.

Futures side, the most-traded contract 2512 held up well. At 10:30 am, SS2511 was quoted at 12,805 yuan/mt, up 120 yuan/mt from the previous trading day. In the Wuxi area, the spot premium/discount for 304/2B was in the range of 265-565 yuan/mt. In the spot market, the average price for cold-rolled 201/2B coil in Wuxi was reported at 8,000 yuan/mt; the average price for cold-rolled mill edge 304/2B coil was 13,050 yuan/mt in both Wuxi and Foshan; the price for cold-rolled 316L/2B coil was 25,325 yuan/mt in both Wuxi and Foshan; the price for hot-rolled 316L/NO.1 coil was reported at 24,850 yuan/mt in both locations; the price for cold-rolled 430/2B coil was 7,600 yuan/mt in both Wuxi and Foshan.

The traditional peak consumption season of "September-October peak season" for stainless steel is nearing its end, and the market is about to enter the year-end off-season. Although the market expects the US Fed to implement two interest rate cuts by year-end, China is in a quantitative easing cycle, and the 15th Five-Year Plan is about to be released, persistent Sino-US trade frictions and the impending end of the second 90-day tariff grace period keep macro environment uncertainties high. On the spot fundamental side, downstream demand side maintained a cautious wait-and-see attitude recently, with overall purchasing and transactions remaining weak. Although the concentrated inventory buildup during the National Day holiday was digested to some extent during the week, the expected production schedule for stainless steel mills in October remains at a relatively high level, keeping market digestion pressure substantial. Cost side, high-grade NPI prices continued to decline, and traders, lacking confidence, sold at low prices to realize cash, further depressing the transaction price of high-grade NPI. The previous tight supply situation for high-carbon ferrochrome eased somewhat, chrome ore prices showed signs of softening, and ferrochrome producers already had good profits. Coupled with weak overall expectations on the demand side, both high-carbon ferrochrome and high-grade NPI prices were in the doldrums, leading to a downward shift in the cost center for stainless steel. Under the influence of multiple factors including macro uncertainties, weak demand, high supply, and loosening cost support, the current stainless steel market struggles to break free from its weak pattern. Close attention should still be paid to favorable macro policies and the production schedules of stainless steel mills going forward.