[SMM Stainless Steel Daily Review] SS Futures Fluctuate Downward, Weak Spot Stainless Steel Transactions Due to High Caution Sentiment

SMM January 12 - SS futures were in the doldrums with limited overall fluctuations. During the daytime session, stainless steel futures opened with a slight increase, then gradually pulled back, and finally settled at 13,855 yuan/mt. In the spot market, morning quotes rose further, driven by the increase in SS futures and the already high futures levels. Although prices for high-grade NPI, high-carbon ferrochrome, and stainless steel scrap were all strengthening, and the price inversion at stainless steel mills eased as stainless steel prices strengthened in sync—with profits restored under lower raw material costs and strong production willingness—downstream demand remained in the off-season, and heavy fear of high prices persisted, leading to weak inquiry and transaction activity during the day.

The most-traded SS futures contract was in the doldrums. At 10:30 a.m., SS2602 was quoted at 13,855 yuan/mt, up 60 yuan/mt from the previous trading day. In Wuxi, the spot premium/discount for 304/2B was in the range of 115-315 yuan/mt. In the spot market, the average price for cold-rolled 201/2B coil in Wuxi was 8,400 yuan/mt; for cold-rolled mill-edge 304/2B coil, the average price in Wuxi was 13,900 yuan/mt, and in Foshan, 13,900 yuan/mt; for cold-rolled 316L/2B coil in Wuxi, 25,850 yuan/mt, and in Foshan, 25,850 yuan/mt; for hot-rolled 316L/NO.1 coil in Wuxi, 24,650 yuan/mt; for cold-rolled 430/2B coil in both Wuxi and Foshan, 7,650 yuan/mt.

Recently, SHFE nickel futures surged significantly, driving SS stainless steel futures higher in sync. SS futures once hit the daily limit up, reaching a new high since 2025. Although it is still the traditional consumption off-season for stainless steel, the continuous surge in futures broke the previous market pessimism. Stainless steel spot prices followed the futures rise, and traders' quotes climbed steadily. Influenced by the "rush to buy amid continuous price rise and hold back amid price downturn" mentality, and coupled with low inventory due to cautious purchasing earlier, recent inquiry and transaction activity improved significantly compared to the previous period. Additionally, total stainless steel production in December fell to 3.23 million mt, indicating a contraction in supply. Combined with traders' earlier reluctance to purchase, social inventory of stainless steel continued to pull back, hitting a new low for the year. Although stainless steel production rebounded in January, the increase was mainly concentrated in 200-series and 400-series products, while 300-series production declined further. Along with the recent strong trend in high-grade NPI prices, 304 stainless steel prices are expected to remain firm in the short term. Although there is a slight inversion for spot raw materials, inventory raw materials still have good profit margins. With NPI prices strengthening, ferrochrome prices firm, and stainless steel scrap prices continuing to rise due to significant economic advantages, overall costs are climbing, providing some support for stainless steel prices. However, the core driver of current stainless steel spot prices still comes from the transmission effect of the futures rally. 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 fundamentally resolved, and prices still face significant pullback risks ahead.