Off-Season Market Pessimism, SS Futures Weaken, Stainless Steel Spot Cargo Follows Decline [SMM Stainless Steel Daily Report]

SMM, November 3 - SS futures trended downward. Today, ferrous metals futures weakened overall, coupled with stainless steel's weak fundamentals and sluggish demand, SS followed the decline, once breaking below 12,600 yuan/mt during the session. Although it recovered slightly in the afternoon, the overall trend remained in the doldrums. In the spot market, as SS futures continued to decline and steel mills relaxed price restrictions, agents lowered their offers under shipment pressure, leading to a further drop in stainless steel spot prices. Stainless steel production saw a slight increase in October, and the expected production cuts in November are limited in realization. Overall supply is expected to remain loose, but with current persistently weak demand, macro tailwinds can hardly significantly impact stainless steel spot prices. In the short term, prices are likely to remain in the doldrums.

The most-traded SS2512 futures contract fell. At 10:30 a.m., SS2512 was quoted at 12,625 yuan/mt, down 85 yuan/mt from the previous trading day. In Wuxi, the spot premium/discount for 304/2B was in the range of 295-595 yuan/mt. In the spot market, the average price for cold-rolled 201/2B coil in Wuxi was 8,050 yuan/mt; for cold-rolled edged 304/2B coil, the average price in Wuxi was 12,900 yuan/mt, and in Foshan, 12,900 yuan/mt; for cold-rolled 316L/2B coil in Wuxi, 25,150 yuan/mt, and in Foshan, 25,200 yuan/mt; for hot-rolled 316L/NO.1 coil, both locations reported 24,550 yuan/mt; for cold-rolled 430/2B coil, both Wuxi and Foshan reported 7,600 yuan/mt.

Although SS futures rose continuously earlier, their impact on the stainless steel spot market was limited. The traditional peak consumption season, the September-October peak season, ended early. Downstream end-users were dominated by a cautious wait-and-see sentiment, mostly maintaining purchasing as needed, resulting in weak demand. In October, stainless steel production remained at a high level, and market digestion pressure was still significant. Social inventory of stainless steel ended the previous destocking trend and recently showed inventory buildup. Cost side, although the November steel tender price for high-carbon ferrochrome was announced steadily this week, retail prices remained in the doldrums. High-grade NPI dropped slightly under steel mills' price pressure, leading to a downward shift in the cost center for stainless steel. Recently, several steel mills announced production cuts for 200-series stainless steel, but production of 300-series and 400-series remained mostly stable. The overall actual production decrease is expected to be limited. China-US trade friction eased significantly, with previously imposed tariffs temporarily suspended, making macro policies relatively favorable. However, the current weak fundamentals remain difficult to improve, and further attention is needed on the implementation of production cuts by stainless steel mills.