[SMM Stainless Steel Daily Review] SS Futures Once Hit the Limit Up, Stainless Steel Spot Cargo Followed with a Significant Rise

SMM January 15 - SS futures surged higher. Driven by yesterday's news of Indonesian nickel mine approvals, both SHFE nickel and SS futures strengthened significantly. The SS night session once hit the limit-up, and although it later pulled back, it continued to fluctuate at highs, closing at 14,415 yuan/mt. Spot market, SS futures' strong gains drove stainless steel spot prices higher. Despite high prices, downstream end-users showed strong fear of high prices and cautious wait-and-see sentiment, resulting in sluggish inquiries and transactions during the day. However, spot cargoes were tight, and low-priced sources were hard to find. Although cost side, high-grade NPI and high-carbon ferrochrome prices rose in tandem, stainless steel mill profits gradually improved amid the sharp increase in stainless steel prices. Social inventory fell 1.28% WoW to 843,700 mt this week.

The most-traded SS futures contract surged higher. At 10:30 a.m., SS2603 was quoted at 14,395 yuan/mt, up 465 yuan/mt from the previous trading day. In Wuxi, the spot premium/discount for 304/2B was in the range of 25-225 yuan/mt. In the spot market, the average price of cold-rolled 201/2B coil in Wuxi was 8,550 yuan/mt; the average price of cold-rolled mill-edge 304/2B coil was 14,350 yuan/mt in Wuxi and 14,300 yuan/mt in Foshan; the price of cold-rolled 316L/2B coil was 26,175 yuan/mt in Wuxi and 26,175 yuan/mt in Foshan; the price of hot-rolled 316L/NO.1 coil was 25,200 yuan/mt in Wuxi; the price of cold-rolled 430/2B coil was 7,750 yuan/mt in both Wuxi and Foshan.

Recently, news from Indonesia's Ministry of Energy and Mineral Resources indicated that although the RKAB approval quota was adjusted from the previously rumored 250 million mt to 260 million mt, the 2025 approval volume still narrowed significantly, and expectations of nickel ore supply tightness remain strong. SHFE nickel futures prices climbed sharply, driving SS stainless steel futures significantly higher. The most-traded contract once hit the limit-up, reaching a new high since June 2024, with strong market sentiment driven by capital inflows. Although it is still the traditional consumption off-season for stainless steel, the strong performance of futures broke the previous cautious market atmosphere. Stainless steel spot prices followed the upward trend, and trader offers rose steadily. As stainless steel spot prices have reached high levels, downstream end-users' fear of high prices intensified, with weak inquiries and purchases, and wait-and-see sentiment has not completely dissipated. However, limited arrivals during the week, combined with traders' previous lack of confidence leading to fewer purchases, as well as their firm price stance and reluctance to sell amid the rising trend, kept overall spot cargoes tight, with few traders offering discounts or low-priced sales. Cost side, synchronous strengthening further solidified support: high-grade NPI prices surged driven by nickel ore news, high-carbon ferrochrome prices also rose supported by factors such as overseas chrome ore tariff policies, and stainless steel scrap prices followed the upward trend of finished products. The market momentum continues to be primarily driven by macro expectations in the futures market and policy negotiations with Indonesia. Although the spot cargo fundamentals are supported by two major bullish factors—low inventory and strong costs—the actual demand from end-users has not yet shown substantial improvement. The current market has entered a phase of "sentiment premium." In the short term, the market may hover at highs, but volatility risks have increased significantly.