[SMM Stainless Steel Daily Review] US Fed Cuts Interest Rate as Expected SS Futures Rally Slows Down Stainless Steel Spot Demand Remains Weak

SMM December 12 news, SS futures showed a weakening and declining trend. Today, influenced by the collective weakness of SHFE nickel and ferrous metals futures, SS futures weakened and declined, with intraday adjustments approaching 12,500 yuan/mt. In the spot market, as futures weakened and declined, the spot market returned to fundamentals. Additionally, restocking transactions at the beginning of the week were largely completed, market trading was sluggish, and most traders opted to offer discounts to promote deals. This week, social inventory accumulated, rising 0.07% WoW to 947,600 mt.

The most-traded SS futures contract was in the doldrums. At 10:30 am, SS2602 was quoted at 12,675 yuan/mt, up 110 yuan/mt from the previous trading day. In Wuxi, spot premiums/discounts for 304/2B were in the range of 195-395 yuan/mt. In the spot market, the average price for Wuxi cold-rolled 201/2B coil was reported at 8,000 yuan/mt; the average price for cold-rolled mill edge 304/2B coil was 12,800 yuan/mt in Wuxi and 12,800 yuan/mt in Foshan; the price for cold-rolled 316L/2B coil in Wuxi was 23,775 yuan/mt and 23,775 yuan/mt in Foshan; the price for hot-rolled 316L/NO.1 coil in Wuxi was reported at 23,000 yuan/mt; the price for cold-rolled 430/2B coil was 7,600 yuan/mt in both Wuxi and Foshan.

This week, the US Fed interest rate cut landed as expected, but as this positive had been largely priced in by the market, the boost to macro sentiment was limited. Although SS futures saw a rapid rise at one point, with the clear year-end policy stabilization tone, further stimulus expectations faded, and upward momentum on the futures was noticeably insufficient, overall presenting a weak rebound pattern of retreating after a rapid rise. Spot market performance was even weaker. Only low-priced resources saw a slight increase in transactions at the start of the week, with downstream players generally adopting a wait-and-see attitude and restocking willingness remaining low. Traders reported persistently insufficient orders, and the trend of year-end demand contraction was a foregone conclusion. The supply-demand imbalance intensified further, with social inventory increasing slightly by 0.07% WoW to 947,600 mt, making destocking pressure increasingly evident; while mainstream steel mills frequently announced planned production cuts for December, the actual reduction in the production schedule might only be 4.15%, far below expectations. Under the pattern of strong supply and weak demand, hidden price reductions in actual transaction prices frequently occurred. Meanwhile, prices for nickel pig iron and ferrochrome continued to decline, with cost support persistently weakening. Overall, the current stainless steel market faces triple pressures: a vacuum in macro drivers, a fundamental supply-demand imbalance, and collapsing cost support. Although futures were briefly lifted by external factors, their own momentum is lacking. Short-term upward momentum is expected to be insufficient, with some downside risks remaining.