[SMM Stainless Steel Daily Review] Macro Uncertainty Disturbs Market, Stainless Steel Futures and Spot Cargo Synchronously Decline

SMM reported on December 16 that SS futures showed a further weakening and downward trend. Today, as the US non-farm payrolls data release approached, market concerns over macro policy uncertainty grew, leading to a broad decline in metal futures. SS futures followed suit, pulling back further and briefly falling below 12,300 yuan/mt during the session. In the spot market, influenced by the continued decline in SS futures, market sentiment turned noticeably pessimistic, and stainless steel spot prices followed the downward trend. Although traders lowered their offers, cautious market sentiment amid the price decline made transactions quite difficult.

The most-traded SS futures contract weakened and declined. At 10:30 a.m., the SS2602 contract was quoted at 12,340 yuan/mt, down 215 yuan/mt from the previous trading day. In the Wuxi area, the spot premiums/discounts for 304/2B were in the range of 380-580 yuan/mt. In the spot market, the average price for Wuxi cold-rolled 201/2B coil was 8,100 yuan/mt; the average price for cold-rolled mill-edge 304/2B coil was 12,650 yuan/mt in both Wuxi and Foshan; the price for cold-rolled 316L/2B coil was 23,775 yuan/mt in both Wuxi and Foshan; the price for hot-rolled 316L/NO.1 coil in Wuxi was 23,000 yuan/mt; and the price for cold-rolled 430/2B coil was 7,600 yuan/mt in both Wuxi and Foshan.

This week, the US Fed cut interest rates as expected, but since the positive impact had already been priced in by the market, the boost to macro sentiment was limited. Although SS futures surged briefly, with the year-end policy stabilization tone becoming clear and further stimulus expectations fading, upward momentum in the futures market was noticeably insufficient, resulting in an overall weak rebound pattern characterized by a retreat after a rapid rise. The spot market performance was even weaker. At the beginning of the week, only low-priced resources saw a slight increase in transactions, while downstream players generally adopted a wait-and-see attitude with low restocking willingness. Traders reported persistently insufficient orders, and the year-end demand contraction trend has become a foregone conclusion. The supply-demand imbalance further intensified, with social inventory increasing slightly by 0.07% WoW to 947,600 mt, making destocking pressure increasingly evident. Although mainstream steel mills frequently announced planned production cuts for December, the actual reduction in the production schedule may only be 4.15%, far below expectations. Amid 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, further weakening cost support. 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 driven by external factors, they lack intrinsic momentum. Short-term upward momentum is expected to remain insufficient, with certain downside risks still present.