SS Futures Break Through June Low Again, Stainless Steel Trading Weak, Traders Offer Discounts [SMM Stainless Steel Daily Review]

SMM November 13 - SS futures opened low and fluctuated within a narrow range intraday. Amid the weak performance of SHFE nickel futures, SS futures remained subdued, continuing to consolidate at the bottom and trading below 12,500 yuan/mt throughout the day, even hitting a new low since June at 12,445 yuan/mt. In the spot market, despite already low stainless steel prices, the recent price declines failed to boost transactions, as the continuous bottoming of SS futures and expectations of a year-end consumption off-season weighed on sentiment. However, pressured by the need to liquidate inventories for cash flow, traders continued to offer discounts. In the afternoon, news emerged that a major steel mill's agent was accepting orders for 300-series hot-rolled products with a 50-yuan discount. Social inventory increased slightly this week, up 0.71% WoW to 952,200 mt.

The most-traded SS futures contract fluctuated at lows. At 10:30 a.m., SS2601 was quoted at 12,480 yuan/mt, down 5 yuan/mt from the previous trading day. In Wuxi, spot premiums/discounts for 304/2B ranged from 290-590 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 trimmed 304/2B coil was 12,750 yuan/mt in Wuxi and 12,800 yuan/mt in Foshan; the price of cold-rolled 316L/2B coil was 24,300 yuan/mt in Wuxi and 24,350 yuan/mt in Foshan; hot-rolled 316L/NO.1 coil was quoted at 23,800 yuan/mt in Wuxi; cold-rolled 430/2B coil was 7,600 yuan/mt in both Wuxi and Foshan.

Stainless steel has officially exited the traditional consumption off-season of the September-October peak season and entered the year-end off-season. Downstream end-user confidence, already weak, was further dampened by the recent continuous decline in SS futures. Market inquiries and purchasing activities were sluggish, with downstream buyers mainly making just-in-time procurement. Although major stainless steel mills first lifted price restrictions and then lowered listed prices to boost sales, the continuous decline in spot prices failed to significantly stimulate demand. Driven by the mentality of "rushing to buy amid continuous price rise and holding back amid price downturn," market trading activity remained low. Despite frequent news of production cuts by stainless steel mills earlier, the actual reductions implemented in November were 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 largely stable. Supply is expected to stay at relatively high levels. Cost side, although stainless steel mills are currently in a situation of price-cost inversion, the recent market weakness and pessimistic expectations have led to declines in prices of high-grade NPI, high-carbon ferrochrome, and even stainless steel scrap, lowering the cost center and providing unstable support for prices. However, with stainless steel prices already at low levels, potential export demand growth following eased Sino-US trade tensions, and the US Fed's interest rate cut cycle, further significant price declines are unlikely. Subsequent attention should still be paid to the implementation of production cuts by stainless steel mills and the demand situation downstream.