SS Futures Decline Drives Spot Cargo, Insufficient Demand and Losses Prompt Stainless Steel Mills to Expect Production Cuts [SMM Stainless Steel Daily Review]

SMM October 28 - SS futures trended downward. Today, dragged by weak precious metal performance, SHFE nickel prices fell. Coupled with weak fundamentals, SS futures followed the decline, once dipping to 12,730 yuan/mt during the session. In the spot market, although the previous rise in SS futures failed to effectively lift spot prices, today's futures pullback led to a corresponding decline in the spot market. With persistently sluggish transactions, market merchants showed increased willingness to offer discounts to move goods, pushing prices even lower. Recently, multiple steel mills announced production cuts, currently focusing mainly on 200-series stainless steel. In the afternoon, influenced by news of further production cuts by steel mills, 201 stainless steel offers edged higher.

The most-traded SS2512 futures contract fell. At 10:30 am, SS2512 was quoted at 12,745 yuan/mt, down 70 yuan/mt from the previous trading day. In Wuxi, the spot premium/discount for 304/2B was in the range of 225-525 yuan/mt. In the spot market, the average price for cold-rolled 201/2B coil in Wuxi was 8,000 yuan/mt; the average price for cold-rolled trimmed 304/2B coil was 12,900 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 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 September-October peak season for stainless steel consumption is nearing its end, with the year-end off-season approaching. Despite market expectations for two interest rate cuts by the US Fed by year-end, China being in a quantitative easing cycle, and the impending release of the 15th Five-Year Plan, persistent Sino-US trade frictions and the approaching end of the second 90-day tariff grace period keep macro environment uncertainty high. On the spot fundamental side, downstream demand remains cautious with a strong wait-and-see attitude recently, resulting in overall weak purchasing and transactions. Although the concentrated inventory buildup during the National Day holiday has been partially digested, the expected October production schedule for stainless steel mills remains at a relatively high level, maintaining significant market digestion pressure. Cost side, high-grade NPI prices continued to decline. Traders, lacking confidence, frequently sold at low prices to realize cash, further depressing high-grade NPI transaction prices. The previous tight supply situation for high-carbon ferrochrome eased somewhat, with chrome ore prices showing signs of softening. Ferrochrome producers, already enjoying good profits, coupled with weak overall demand-side expectations, led both high-carbon ferrochrome and high-grade NPI prices to remain in the doldrums, causing the cost center for stainless steel to shift downward. Under the combined influence of macro uncertainty, weak demand, high supply, and loosening cost support, the current stainless steel market struggles to break free from its weak pattern. Close attention remains necessary on favorable macro policies and stainless steel mill production schedules.