SS Futures Remain Weak, Steel Mills Cut Prices, Stainless Steel Spot Cargo Follows Decline [SMM Stainless Steel Daily Report]

SMM November 5 news, SS futures showed a downward trend. Today, ferrous metals futures weakened further, and SS futures followed with further declines, trading below 12,600 yuan/mt throughout the day, with intraday lows approaching 12,500 yuan/mt again. In the spot market, as SS futures continued to decline, pessimism in the stainless steel market intensified, and transactions were mainly driven by rigid demand. In the afternoon, a stainless steel mill in South China released its latest prices, which generally fell by 200 yuan compared to the previous round. Currently, stainless steel prices are at relatively low levels, and steel mills are facing inverted cost-price relationships, but this has still failed to reverse the prevailing pessimism in the market, with transactions remaining in the doldrums.

The most-traded SS2512 futures contract declined. At 10:30 a.m., SS2512 was quoted at 12,560 yuan/mt, down 65 yuan/mt from the previous trading day. Spot premiums/discounts for 304/2B in Wuxi ranged from 360-660 yuan/mt. In the spot market, the average price for cold-rolled 201/2B coil in Wuxi was 8,050 yuan/mt; the average price for cold-rolled edged 304/2B coil was 12,900 yuan/mt in Wuxi and 12,900 yuan/mt in Foshan; the price for cold-rolled 316L/2B coil in Wuxi was 25,150 yuan/mt, and 25,200 yuan/mt in Foshan; the price for hot-rolled 316L/NO.1 coil in Wuxi was 24,550 yuan/mt; the price for cold-rolled 430/2B coil in both Wuxi and Foshan was 7,600 yuan/mt.

Although SS futures had been rising earlier, their impact on the stainless steel spot market was limited. The traditional peak consumption season of September-October ended early, with downstream end-users adopting a cautious wait-and-see approach, mostly maintaining purchasing as needed, resulting in weak demand. In October, stainless steel production remained at high levels, and market digestion pressure was still significant. Social inventory of stainless steel ended the previous destocking trend and recently showed signs of 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 saw slight declines due to steel mills driving down prices, leading to a downward shift in the cost center for stainless steel. Recently, several stainless steel mills announced production cuts for 200-series stainless steel, but production of 300-series and 400-series remained largely stable, with the overall actual production decline expected to be limited. The U.S.-China trade friction eased significantly, with previously imposed tariffs temporarily suspended, creating favorable macro policies. However, the current weak fundamentals remain difficult to improve, and further attention is needed on the implementation of production cuts by stainless steel mills.