[SMM Analysis] Cost-Driven Futures Surge Significantly, Spot Trading Rises Then Pulls Back [SMM Stainless Steel Futures Weekly Review]

SMM data showed that this week (January 5-9, 2026), as the first full trading week of the new year, the stainless steel market saw a "good start" rally. The most-traded contract officially switched to SS2603. As of 10:30 on January 9, the contract price rose to 13,795 yuan/mt, up 605 yuan/mt (+4.59%) from the closing price of 13,190 yuan/mt last Wednesday (the last trading day before the holiday). The rise this week was mainly driven by a significant increase on the cost side and macro fund attention. Expectations of tightening supply from Indonesian ore continued to ferment, coupled with sentiment resonance in the non-ferrous sector triggered by geopolitical tensions, leading to capital inflows into the nickel and stainless steel sectors and driving a significant rise in the futures price center.

From a macro perspective, weak overseas economic data coexisted with risk-aversion sentiment, pushing up non-ferrous valuations. The US December ISM Manufacturing PMI unexpectedly fell to 47.9, with both new orders and inventory indices contracting, indicating continued contraction in manufacturing activity and strong willingness among enterprises to destock. However, the price index remained high, suggesting persistent inflationary pressures. Meanwhile, changes in US-Venezuela tensions raised concerns about global resource supply, with safe-haven precious metals leading the gains, and sentiment spread to the non-ferrous sector. Domestically, the central bank conducted net liquidity injections via government bond purchases for the third consecutive month, maintaining reasonable and ample liquidity in the money market. Against this macro backdrop, nickel and stainless steel became focal points for market trading on inflation expectations and supply bottlenecks.

Fundamentally, social inventory continued to decline, but spot transactions showed a "high first, low later" pattern. The latest SMM data showed that social inventory fell to 854,000 mt this week, down further from 872,000 mt before the holiday (December 31). In the initial period after the holiday (January 6), driven by the sharp rise in futures, market speculation and restocking sentiment warmed, transactions were once active, and some traders showed reluctance to sell and held prices firm. However, as futures prices surged rapidly, downstream acceptance of high-priced materials significantly decreased. From January 7, the market turned cautious and watchful, with high-price transactions hindered. This week's destocking was mainly due to earlier rush-to-export order deliveries and concentrated restocking in the initial post-holiday period. Going forward, the sustainability of destocking under high prices remains to be seen.

Cost side, the sharp rise was a key support for this week's market. As of January 9, raw material prices increased across the board: high-grade NPI offers rose nearly 40 yuan WoW to 962 yuan/mtu; high-carbon ferrochrome also increased to 8,250 yuan/mt (50% metal content). In Indonesia, although the Minister of Energy and Mineral Resources mentioned the 2026 coal quota, key nickel production quota policies remained unclear, stating they would be "adjusted based on demand."Although this policy uncertainty does not directly point to supply shortages, it has helped restore market sentiment compared to Thursday, providing support for the firmness of raw material prices. The rise in raw material prices has significantly raised the production cost floor for steel mills, limiting the downside room for futures while pushing spot prices to follow the upward trend passively.

Overall assessment: In the first week of 2026, the stainless steel market exhibited a pattern of “costs and funds rising in resonance, with the spot side passively following.” Uncertainty around Indonesian policies, combined with geopolitical disturbances, has temporarily allowed cost logic to dominate market direction. Technically, after breaking through with heavy volume, futures have entered a phase of fluctuating at highs. However, as prices approach the 13,800 level, pressure to narrow the spot-futures price spread and weak downstream purchase willingness at high levels will become major upward resistance. Although high costs provide solid bottom support, caution is warranted against negative feedback risks triggered by weakening spot transactions. It is expected that futures will continue to hover at highs and consolidate, awaiting downstream confirmation of the new price center.