SS Futures Continue to Grind at the Bottom, Stainless Steel Spot Prices See Limited Pullback at Low Levels [SMM Stainless Steel Daily Report]

SMM, November 11 - SS futures showed a trend of pulling back. With SHFE nickel and ferrous metals moving lower in sync, and the stainless steel fundamentals remaining weak, SS futures weakened again, approaching 12,500 yuan/mt near the close. In the spot market, influenced by the weakness in SS futures, market sentiment weakened again, and some traders slightly lowered their offers. However, stainless steel prices are already at relatively low levels, and traders' previous purchase costs were high, so the price decline was limited.

The most-traded SS futures contract pulled back. At 10:30 a.m., SS2601 was quoted at 12,560 yuan/mt, down 5 yuan/mt from the previous trading day. In Wuxi, the spot premiums/discounts for 304/2B were in the range of 310-610 yuan/mt. In the spot market, the average price for cold-rolled 201/2B coil in Wuxi was reported at 8,050 yuan/mt; for cold-rolled mill-edge 304/2B coil, the average price was 12,850 yuan/mt in both Wuxi and Foshan; for cold-rolled 316L/2B coil, it was 24,550 yuan/mt in Wuxi and 24,600 yuan/mt in Foshan; for hot-rolled 316L/NO.1 coil, it was 23,800 yuan/mt in Wuxi; for cold-rolled 430/2B coil, it was 7,600 yuan/mt in both Wuxi and Foshan.

Formally leaving behind the traditional consumption off-season of the "September-October peak season" and entering the year-end off-season. The already insufficient confidence of downstream end-users was further dampened by the recent continuous decline in SS futures. Market inquiries and purchase activities were sluggish, with downstream users mostly maintaining just-in-time procurement. Although mainstream steel mills first canceled price restrictions and then lowered their listed prices to actively destock, the continuous decline in spot prices did not have a significant positive impact on boosting demand. Driven by the mentality of "rushing to buy amid continuous price rise and holding back amid price downturn," market trading activity remained low. Although news of production cuts by stainless steel mills was frequently reported earlier, the actual production cuts implemented in November were relatively limited, mainly concentrated in the 200-series stainless steel, which had seen significant production increases previously, while production of 300-series and 400-series stainless steel remained basically stable, and supply is expected to remain at high levels. 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, leading to a downward shift in the cost center of stainless steel, 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 downstream demand conditions.