Trade Friction Eases, SS Recovers Previous Losses, Weak Demand Persists, Stainless Steel Spot Prices Remain Weak [SMM Stainless Steel Daily Report]

SMM October 27 - SS futures showed a fluctuating trend in the doldrums. Against the backdrop of eased China-US trade friction, the tariff grace period is expected to be extended again, which pushed futures further up today, with the high point once touching 12,870 yuan/mt. In the spot market, despite the continuous rise in SS futures, the spot market reaction was relatively limited. Traders generally reported that downstream end-users' purchasing sentiment remained low, mainly making just-in-time procurement, holding reservations about price increases. High-priced spot cargo was difficult to transact, and transactions still relied on discounted low-priced cargo. The current market remains in a state of loose supply and weak demand. Although there are positive factors from a macro perspective, their volatility is significant, and downstream wait-and-see sentiment is strong. Additionally, recent price loosening on the cost side has made industry participants more cautious about future expectations.

Futures side, the most-traded contract 2512 fluctuated weakly in the doldrums. At 10:30 am, SS2511 was quoted at 12,815 yuan/mt, up 10 yuan/mt from the previous trading day. In Wuxi, the spot premiums/discounts for 304/2B were in the range of 255-555 yuan/mt. In the spot market, the average price for cold-rolled 201/2B coil in Wuxi was reported at 8,000 yuan/mt; for cold-rolled mill-edge 304/2B coil, the average price in Wuxi was 13,050 yuan/mt, and in Foshan 13,050 yuan/mt; for cold-rolled 316L/2B coil in Wuxi, 25,325 yuan/mt, and in Foshan 25,325 yuan/mt; for hot-rolled 316L/NO.1 coil, both locations reported 24,850 yuan/mt; for cold-rolled 430/2B coil, both Wuxi and Foshan reported 7,600 yuan/mt.

The traditional stainless steel consumption peak season of "September-October peak season" is nearing its end, and the year-end off-season is approaching. Although the market expects the US Fed to implement two rounds of 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 China-US trade friction and the impending end of the second 90-day tariff grace period keep macro environment uncertainties strong. On the spot fundamental side, downstream demand continues to exhibit strong cautious wait-and-see sentiment recently, with overall procurement and transactions relatively weak. Although the concentrated inventory buildup during the National Day holiday has been digested to some extent, the expected production schedule for stainless steel mills in October remains at a relatively high level, leaving significant market digestion pressure. Cost side, high-grade NPI prices continued to decline, with traders lacking confidence and selling at low prices to realize cash, further depressing high-grade NPI transaction prices. The previous tight supply situation for high-carbon ferrochrome has eased somewhat, chrome ore prices have loosened, and ferrochrome producers already had good profits. Coupled with weak overall expectations from the demand side, both high-carbon ferrochrome and high-grade NPI prices are 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 away from its weak pattern. Close attention is still needed on macro policy benefits and stainless steel mill production schedules.