[SMM Stainless Steel Daily Review] SS Futures Reach Highs Since April, Stainless Steel Spot Market Sentiment Strengthens with Rising Quotations

SMM January 6th, SS futures continued to maintain a steady upward trend. Driven by news, SHFE nickel futures further surged, pulling SS up to probe higher, reaching 13,420 yuan/mt near the close, hitting the highest point since the US tariff war in April. In the spot market, recent consecutive rises in futures boosted confidence, and with traders previously having insufficient stock, market supply was somewhat tight. Traders' quotes increased step by step, and under the mentality of rushing to buy amid continuous price rise and holding back amid price downturn, inquiries and transactions were good during the day, with some traders even suspending quotes in the afternoon.

The most-traded SS futures contract further rose. At 10:30 AM, SS2602 was at 13,320 yuan/mt, up 195 yuan/mt from the previous trading day. The spot premiums and discounts for 304/2B in Wuxi ranged from 50-250 yuan/mt. In the spot market, Wuxi cold-rolled 201/2B coils were quoted at 8,200 yuan/mt; cold-rolled 304/2B coils, with an average price of 13,300 yuan/mt in Wuxi and 13,300 yuan/mt in Foshan; Wuxi cold-rolled 316L/2B coils at 24,675 yuan/mt, and Foshan at 24,700 yuan/mt; hot-rolled 316L/NO.1 coils in Wuxi at 23,800 yuan/mt; both Wuxi and Foshan cold-rolled 430/2B coils at 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 surging. In the spot market, although stainless steel was still in the traditional consumption off-season at year-end, with relatively low end-use demand, the strengthening of futures led to a concurrent rise in spot quotes. Although downstream buyers found it hard to accept high-priced goods, overall transactions were moderate recently with slight concessions from traders. Recently, destocking of stainless steel social inventory has been quite noticeable, with total social inventory dropping to 892,400 mt as of December 25. The recent price increase has restored profitability for steel mills in terms of raw material inventory costs. Additionally, with continuous production cuts and inventory reduction, the pressure on steel mills to sell has decreased, and the willingness to produce has increased, with production expected to increase slightly in January. 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 recent increases in orders due to the rush to export window will likely overdraw January's export demand. Cost side, nickel pig iron prices continue to climb, driven by news about nickel mines and expectations of tight supply; high-carbon ferrochrome prices saw a relatively small decline; and stainless steel scrap prices rose in tandem with stainless steel spot and nickel pig iron. Stainless steel costs are still on an upward trend, with cost support strengthening. Currently, the stainless steel market shows a pattern where futures drive the spot, and the situation of the year-end consumption off-season has not significantly improved. Recent price increases were largely influenced by news, with a strong rebound in the futures market, coupled with strong cost support and continuous inventory reduction, leading to a rise in stainless steel spot prices. However, there is still a certain risk of pullback in the market.