[SS Futures Daily Review] Indonesian Nickel Mine Approval Concerns Cause SS Futures to Pull Back, Fear of High Prices Intensifies in the Stainless Steel Spot Market

SMM Jan. 8 – SS futures showed a trend of pulling back. Although SS futures opened high during the night session and surged initially, they continued to decline later. Market concerns over uncertainties in Indonesian nickel ore approval volumes and heavy fear of high prices after the rally led to an intraday low of 13,555 yuan/mt. In the spot market, futures gradually pulled back intraday but remained at relatively high levels. Although spot traders offered small discounts, overall offers saw limited declines, and wait-and-see sentiment was strong. However, recent transactions have clearly decreased, and traders' willingness to hold prices firm is not strong amid futures pullback risks. Social inventory dropped 2.06% WoW to 854,600 mt.

The most-traded SS contract fell. At 10:30 a.m., SS2602 was reported at 13,840 yuan/mt, down 30 yuan/mt from the previous trading day. Spot premiums/discounts for 304/2B in Wuxi ranged from 130-330 yuan/mt. In the spot market, the average price of 201/2B cold-rolled coil in Wuxi was 8,400 yuan/mt; the average price of 304/2B cold-rolled coil (mill edge) was 13,900 yuan/mt in both Wuxi and Foshan; the price of 316L/2B cold-rolled coil in Wuxi was 25,900 yuan/mt; the price of 316L/NO.1 hot-rolled coil in Wuxi was 24,700 yuan/mt; and the price of 430/2B cold-rolled coil in both Wuxi and Foshan was 7,650 yuan/mt.

Recent sharp gains in SHFE nickel futures drove SS stainless steel futures higher, with SS futures hitting limit-up and reaching a new high since 2025. Although it is still the traditional consumption off-season for stainless steel, the continuous surge in futures broke previous pessimistic sentiment. Stainless steel spot prices followed futures higher, and trader offers rose steadily. Downstream, influenced by the mentality of "rush to buy amid continuous price rise and hold back amid price downturn," coupled with cautious purchases earlier leading to low inventory, recent inquiries and transaction activity significantly improved. Additionally, total stainless steel production fell to 3.23 million mt in December, indicating some contraction in supply. Combined with traders' earlier reluctance to purchase, social inventory of stainless steel continued to drop, hitting a new low for the year. Although stainless steel production rebounded in January, the increase was mainly in 200-series and 400-series products, while 300-series production declined further. With high-grade NPI prices remaining strong recently, 304 stainless steel prices are expected to stay firm in the short term. Although there was a slight inversion in spot raw material costs, inventory raw materials still had good profit margins. Strengthening NPI prices and firm ferrochrome prices, along with significant cost advantages of stainless steel scrap, will continue to push up finished product prices. Overall costs kept rising, providing some support for stainless steel prices. However, the core driver of current stainless steel spot prices remains the transmission effect of futures gains. Although the supply-demand imbalance in the spot market eased earlier, the fundamental issue of insufficient real end-user demand during the downstream off-season has not been resolved, and prices still face significant pullback risks ahead.