[SMM Stainless Steel Daily Review] SS Futures Hold Up Well, Stainless Steel Spot Prices Supported at High Levels

SMM January 14 - SS futures continued to hold up well. The overall strength in nonferrous metals futures drove stainless steel futures higher, with SS futures once again testing above the 14,000 yuan/mt mark. In the spot market, strengthened by the futures rally, spot traders raised their offers accordingly; although downstream wait-and-see sentiment intensified and inquiry activity remained weak, the continuous rise in futures, along with cost support gradually increasing due to high-grade NPI and high-carbon ferrochrome, coupled with limited low-price restocking by traders earlier and scarce low-priced cargoes in the market, maintained some bullish expectations, supporting prices to fluctuate at highs.

The most-traded SS futures contract was in the doldrums. At 10:30 a.m., SS2603 was quoted at 13,930 yuan/mt, up 135 yuan/mt from the previous trading day. In Wuxi, spot premiums/discounts for 304/2B were in the range of 40-240 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, while in Foshan it was 13,800 yuan/mt; for cold-rolled 316L/2B coil in Wuxi, the price was 25,725 yuan/mt, and in Foshan it was 25,725 yuan/mt; for hot-rolled 316L/NO.1 coil in Wuxi, the price was 24,650 yuan/mt; for cold-rolled 430/2B coil in both Wuxi and Foshan, the price was 7,650 yuan/mt.

Recently, SHFE nickel futures prices surged significantly, driving SS stainless steel futures higher in tandem. SS futures once hit the daily limit, 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 pessimistic market sentiment. Stainless steel spot prices followed the futures rally, with traders' offers climbing steadily; influenced by the mentality of rushing to buy amid continuous price rise and holding back amid price downturn, and coupled with cautious purchasing earlier leading to low inventory, recent inquiry and transaction activity have significantly improved compared to the previous period. Additionally, total stainless steel production in December fell to 3.23 million mt, indicating some contraction in supply; combined with traders' reluctance to purchase earlier, social inventory of stainless steel continued to pull back, hitting a new low for the year. Although stainless steel production in January rebounded somewhat, the increase was mainly concentrated in 200-series and 400-series products, while 300-series production declined further; coupled 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 maintain good profit margins; with NPI prices strengthening and ferrochrome prices holding firm, stainless steel scrap prices will continue to follow finished products higher due to significant economic advantages. Overall costs continue to rise, 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 has eased somewhat 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 in the subsequent period.