[SMM Stainless Steel Daily Review] SS Futures Retreat After Rapid Rise at the Start of the Year, Stainless Steel Spot Market Sentiment Optimistic with Quotations Testing Higher

SMM January 5th, SS futures showed a pattern of retreating after rapid rise. On the first trading day of 2026, SS futures quickly surged after opening, reaching a high of 13,260 yuan/mt; however, subsequently dragged down by the overall weakness in SHFE nickel and ferrous metals futures, the market gradually pulled back, finally closing at 13,075 yuan/mt. In the spot market, the morning's rapid rise in SS futures led to traders raising their quotes, driven by the "rush to buy amid continuous price rise and hold back amid price downturn" mentality, significantly boosting market inquiry activity; coupled with a mainstream stainless steel mill also raising its prices, market sentiment remained optimistic. Despite the afternoon pullback in futures, spot prices remained relatively firm.

The most-traded SS futures contract retreated after rapid rise. At 10:30 AM, SS2602 was quoted at 13,125 yuan/mt, up 30 yuan/mt from the previous trading day. The spot premiums/discounts for 304/2B in Wuxi ranged between 195-395 yuan/mt. In the spot market, Wuxi cold-rolled 201/2B coils were all quoted at 8,200 yuan/mt; cold-rolled 304/2B coils, Wuxi average 13,250 yuan/mt, Foshan average 13,250 yuan/mt; Wuxi cold-rolled 316L/2B coils 24,675 yuan/mt, Foshan 24,700 yuan/mt; hot-rolled 316L/NO.1 coils, Wuxi 23,700 yuan/mt; both Wuxi and Foshan cold-rolled 430/2B coils were 7,600 yuan/mt.

Driven by news related to Indonesian nickel mines, stainless steel futures ended their previous weakening trend, with SHFE nickel and SS futures rapidly rising. In the spot market, although stainless steel was still in the traditional consumption off-season at year-end, with relatively low end-use demand, spot quotes increased in tandem with the strengthening of the futures market. Although downstream buyers found it hard to accept higher prices, recent overall transactions have been moderate under slight discounts offered by traders. Recently, destocking of stainless steel social inventory has been quite noticeable, with total social inventory dropping to 892,400 mt as of December 25th. Recent price increases have restored profitability for stainless steel mills in terms of raw material inventory costs. Additionally, due to continuous production cuts and inventory declines, the pressure on mills to sell has decreased, and production willingness has strengthened, with January production expected to increase slightly. Moreover, stainless steel products have been re-included in the export license management scope, with policies stipulating "one batch, one certificate" management, and the license validity period is 3 months. Future exports may be restricted, but recently, under the influence of the rush to export window, the number of orders has increased, which will preemptively consume January's export demand. Cost side, nickel iron prices continue to climb, influenced by nickel mine news and tight supply expectations; high-carbon ferrochrome prices fell relatively small; scrap stainless steel prices rose in line with spot stainless steel and nickel iron. Stainless steel costs are still on an upward trend, with cost support strengthening. Currently, the stainless steel market shows a trend of futures driving spot, with no significant improvement in the year-end off-season. Recent price increases have largely been influenced by news, with a strong rebound in the futures market, coupled with strong cost support and continuous inventory decline, leading to a rise in spot stainless steel prices. However, there remains a certain risk of pullback in the market.