Stainless Steel Market Faces Year-End Off-Season, Spot Prices Remain Low and Fail to Boost Demand [SMM Stainless Steel Daily Report]

SMM November 7 - SS futures pulled back. Although SHFE nickel performed strongly yesterday due to news from Indonesia, as market sentiment weakened again today, coupled with the decline in ferrous metals futures, SS futures returned to the previous weak state, falling below 12,550 yuan/mt during the session. In the spot market, SS futures performed weakly overall this week. Major stainless steel mills first canceled price restrictions and then lowered stainless steel list prices, with the market remaining sluggish and stainless steel spot prices staying low. Despite active price cuts to promote sales, as the year-end off-season began and influenced by the "rush to buy amid continuous price rise and hold back amid price downturn" mentality, transactions remained sluggish this week. Social inventory increased slightly this week, down 0.14% WoW to 945,500 mt.

The most-traded SS2512 futures contract pulled back. At 10:30 a.m., SS2512 was quoted at 12,550 yuan/mt, flat from the previous trading day. In Wuxi, spot premiums/discounts for 304/2B were in the range of 320-620 yuan/mt. In the spot market, the average price of cold-rolled 201/2B coil in Wuxi was 8,050 yuan/mt; the average price of cold-rolled mill edge 304/2B coil was 12,850 yuan/mt in Wuxi and 12,850 yuan/mt in Foshan; the price of cold-rolled 316L/2B coil in Wuxi was 25,150 yuan/mt and 25,200 yuan/mt in Foshan; the price of hot-rolled 316L/NO.1 coil in Wuxi was 24,550 yuan/mt; the price of cold-rolled 430/2B coil in both Wuxi and Foshan was 7,600 yuan/mt.

Formally leaving behind the traditional consumption off-season of the "September-October peak season" and entering the year-end off-season. Downstream end-user confidence, already insufficient, was further dampened by the recent continuous decline in SS futures. Market inquiries and purchasing activities were sluggish, with downstream players mostly maintaining just-in-time procurement. Although major stainless steel mills first canceled price restrictions and then lowered list prices to actively sell, the continuous decline in spot prices did not have a significant positive impact on boosting demand. Under the influence of the "rush to buy amid continuous price rise and hold back amid price downturn" mentality, market transaction activity remained low. Although news of production cuts by stainless steel mills was frequently reported earlier, the actual implemented cuts in November were relatively limited, mainly concentrated in the 200 series stainless steel, which had seen significant production increases earlier, while production of 300 series and 400 series stainless steel remained basically stable, and supply is expected to remain at a high level. Cost side, although stainless steel mills are currently in a situation of cost-price inversion, amid recent market weakness and pessimistic expectations, prices of high-grade NPI, high-carbon ferrochrome, and even stainless steel scrap have declined, lowering the cost center for stainless steel and providing unstable support for prices. However, current stainless steel prices are already at low levels, and export demand is expected to increase after the easing of Sino-US trade friction, coupled with the US Fed's interest rate cut cycle, making it difficult for stainless steel prices to fall significantly further. Subsequent attention should still be paid to the implementation of production cuts by stainless steel mills and the demand situation downstream.