[SMM Stainless Steel Daily Review] SS Futures Continue to Rise, Breaking Through 13,200 yuan/mt; Stainless Steel Spot Traders Offer Discounts to Boost Downstream Demand

SMM December 30 - SS futures showed a strengthening and probing trend. Driven by the renewed strength in SHFE nickel futures, SS futures extended their gains and climbed higher, probing a recent high of 13,200 yuan/mt during the session. Spot market side, spurred by the rise in SS futures, spot prices continued to hold up well. Although the current uptrend was driven by news flow, market caution and wait-and-see sentiment were strong, acceptance of high-priced material was moderate. However, some steel mill agents had already suspended offers. NPI prices rose successively, and traders' attractiveness to downstream buyers increased through price concessions.

The most-traded SS futures contract strengthened and probed higher. At 10:30 am, SS2602 was quoted at 13,060 yuan/mt, up 85 yuan/mt from the previous trading day. In the Wuxi spot market, the premium/discount for 304/2B was in the range of 60-310 yuan/mt. In the spot market, the average price for Wuxi cold-rolled 201/2B coil was reported at 8,200 yuan/mt; the average price for cold-rolled mill-edge 304/2B coil was 13,075 yuan/mt in Wuxi and 13,075 yuan/mt in Foshan; the price for cold-rolled 316L/2B coil in Wuxi was 24,150 yuan/mt, and 24,150 yuan/mt in Foshan; the price for hot-rolled 316L/NO.1 coil in Wuxi was reported at 23,250 yuan/mt; the price for cold-rolled 430/2B coil was 7,600 yuan/mt in both Wuxi and Foshan.

This week, the main trading theme for stainless steel swiftly switched from "weak reality" to "expectations-driven trading." Rumors of tightened approvals for Indonesian nickel mines first ignited bullish sentiment among financial funds, leading to a coordinated rally in the persistently low SS and SHFE nickel, with the futures discount narrowing rapidly, forcing stainless steel spot prices to follow the rise. Although year-end demand was at a seasonally low level, stainless steel social inventory destocking accelerated somewhat WoW, down 3.7% to 892,400 mt, driven by the combined effects of: production cut news from stainless steel mills triggering expectations for supply-demand contraction; recent price surges stimulating a market mentality to "rush to buy amid continuous price rise and hold back amid price downturn"; and adjustments to domestic export policies (re-inclusion of stainless steel products under export licensing management) driving increased demand for exports within the window period. Cost side, affected by nickel ore news and recent replenishment by some traders and small-to-medium steel mills, high-grade NPI prices stopped falling and strengthened; the decline in high-carbon ferrochrome prices was limited, providing enhanced cost support for stainless steel. Overall, however, the recent strength in the stainless steel market relied heavily on strong news flow support, while the impact of the year-end demand off-season persisted. Although prices rose in the short term driven by news stimulus, cost support, and expectations for mill production cuts, the market still faced some risk of a pullback.