Macro Tailwinds Halt the Decline in SS Futures, While Sluggish Spot Stainless Steel Transactions Make Price Increases Difficult [SMM Stainless Steel Daily Report]

SMM reported on November 24 that the SS futures showed a trend of bottoming out and recovery. The US Fed once again made dovish remarks, leading to increased expectations for an interest rate cut within the year. Metal futures generally rose at the opening today, with SS futures also strengthening, briefly touching 12,400 yuan/mt. However, there was still resistance above, limiting the overall gain, and it closed at 12,335 yuan/mt. In the spot market, the strength in SS futures boosted inquiries for stainless steel, but actual transactions remained mediocre. In the afternoon, as SS futures pulled back and traders faced pressure to sell, stainless steel prices held steady at low levels.

The most-traded SS futures contract showed signs of bottoming out and recovery. At 10:30 AM, SS2601 was quoted at 12,355 yuan/mt, down 30 yuan/mt from the previous trading day. In Wuxi, the spot premiums and discounts for 304/2B were in the range of 365-615 yuan/mt. In the spot market, Wuxi cold-rolled 201/2B coils were quoted at 8,025 yuan/mt; cold-rolled 304/2B coils, with trimmed edges, averaged 12,675 yuan/mt in Wuxi and 12,700 yuan/mt in Foshan; cold-rolled 316L/2B coils were 24,300 yuan/mt in both Wuxi and Foshan; hot-rolled 316L/NO.1 coils were 23,700 yuan/mt in Wuxi; and cold-rolled 430/2B coils were 7,600 yuan/mt in both Wuxi and Foshan.

At year-end, during the off-season, stainless steel demand remained weak, with prices continuously testing new lows. Additionally, the potential disappointment of the December interest rate cut expectation by the US Fed, a macro headwind, led SS futures to break through new lows since 2020. Stainless steel mills' selling prices also softened, showing a pullback. However, the pessimistic sentiment in the market did not dissipate, and low prices did not significantly boost recent transactions, with traders generally reporting sluggish sales. From the supply side, there were widespread rumors in November about production cuts at stainless steel mills, with the affected grades expanding from 200-series to 400-series stainless steel. However, the actual implementation of these cuts still needs further observation. On the cost side, despite the continued decline in high-carbon ferrochrome and high-grade NPI prices, stainless steel mills still faced a situation where costs exceeded prices. A major stainless steel mill announced procurement prices for high-grade NPI and high-carbon ferrochrome during the week, indicating a reduced effort to drive down prices, especially for high-carbon ferrochrome, which was clearly higher than the market retail price, suggesting a clear intention to secure raw material supplies. This may lead to a reduction in the expected scale of future production cuts.