[SMM Stainless Steel Daily Review] SS Futures Struggle to Gain Upward Momentum, Wait-and-See Sentiment Strengthens in Stainless Steel Spot Market

SMM January 13, SS futures were in the doldrums. The SHFE nickel night session's sharp pullback dragged SS down in sync. Although prices strengthened briefly after the daytime session opened, they weakened again in the afternoon, finally settling at 13,790 yuan/mt. In the spot market, morning spot offers were lowered following the weak night session of SS futures. However, as futures gradually recovered and rebounded, coupled with a price raise by a southern steel mill, spot offers also recovered. Nevertheless, the upward momentum in SS futures has recently shown signs of fatigue, market cautious wait-and-see sentiment intensified, and transactions remained sluggish.

The most-traded SS futures contract was in the doldrums. At 10:30 am, SS2603 was quoted at 13,795 yuan/mt, down 60 yuan/mt from the previous trading day. In Wuxi, the spot premium/discount for 304/2B was in the range of 175-375 yuan/mt. In the spot market, the average price for cold-rolled 201/2B coil in Wuxi was 8,400 yuan/mt; the average price for cold-rolled mill-edge 304/2B coil was 13,900 yuan/mt in Wuxi and 13,750 yuan/mt in Foshan; the price for cold-rolled 316L/2B coil was 25,850 yuan/mt in Wuxi and 25,850 yuan/mt in Foshan; the price for hot-rolled 316L/NO.1 coil was 24,650 yuan/mt in Wuxi; the price for cold-rolled 430/2B coil was 7,650 yuan/mt in both Wuxi and Foshan.

Recently, SHFE nickel futures prices 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 currently still the traditional consumption off-season for stainless steel, the continuous surge in futures broke the market's previous pessimistic sentiment. Stainless steel spot prices followed the rise in futures, and trader offers 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 previously cautious purchases, recent inquiries and transaction activity significantly improved compared to the earlier period. Furthermore, total stainless steel production in December dropped to 3.23 million mt, indicating some contraction on the supply side. Combined with previously insufficient purchase willingness among traders, social inventory of stainless steel continued to pull back, hitting a new low for the year. Although stainless steel production rebounded somewhat in January, the increase was mainly concentrated in the 200-series and 400-series products, while 300-series production actually declined further. Coupled with the recent firm 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 maintain good profit margins. Strengthening NPI prices, firm ferrochrome prices, and stainless steel scrap prices, due to their significant economic advantage, will continue to rise following finished products. Overall costs kept probing higher, providing some support for stainless steel prices. However, the core driver for current stainless steel spot prices still comes from the transmission effect of the futures rally. Although the previous supply-demand imbalance in the spot market has eased somewhat, 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.