[SMM Stainless Steel Daily Review] SS futures fluctuate at highs, stainless steel spot cargo supply tight and high.

SMM January 16th, SS futures retreated after rapid rise. Although the SS futures opened with a slight increase in the morning, it declined in the afternoon following the drop of SHFE nickel, closing at 14,275 yuan/mt. In the spot market, the stainless steel futures further probed higher this week, and market sentiment held up well. Despite some profit-taking operations at the beginning of the week due to a slight correction in the futures, the spot prices rose along with the futures as news about Indonesian nickel ore stimulated the market. Although the fear of high prices was evident, tight supply and strong expectations made it difficult to find low-priced goods. Social inventory WoW decreased by 1.28% to 843,700 mt this week.

The most-traded SS futures contract retreated after rapid rise. At 10:30 am, SS2603 was quoted at 14,450 yuan/mt, up 55 yuan/mt from the previous trading day. The spot premiums and discounts for 304/2B in Wuxi ranged from 20 to 220 yuan/mt. In the spot market, the 201/2B cold-rolled coil in Wuxi was quoted at 8,550 yuan/mt; the 304/2B cold-rolled coil with trimmed edges, averaged 14,400 yuan/mt in Wuxi and 14,300 yuan/mt in Foshan; the 316L/2B cold-rolled coil in Wuxi and Foshan both were 26,300 yuan/mt; the 316L/NO.1 hot-rolled coil in Wuxi was 25,500 yuan/mt; the 430/2B cold-rolled coil in both Wuxi and Foshan was 7,750 yuan/mt.

Recently, the Ministry of Energy and Mineral Resources of Indonesia announced that although the RKAB quota was adjusted from the previously rumored 2.5 billion tons to 2.6 billion tons, the approval volume for 2025 would still be significantly reduced, maintaining the expectation of a tight nickel ore supply. The strong climb in SHFE nickel futures drove the SS stainless steel futures to surge, with the most-traded contract hitting the daily limit up, reaching a new high since June 2024, driven by significant market sentiment. Despite being in the traditional consumption off-season for stainless steel, the robust performance of the futures broke the cautious atmosphere, leading to a follow-up increase in spot prices, with traders continuously raising their quotes. As the spot prices reached high levels, downstream end-users became more cautious, showing weak inquiry and purchasing activities, and the wait-and-see sentiment in the market did not completely dissipate. However, limited arrivals during the week, combined with traders' earlier lack of confidence in purchasing, and the mentality of holding prices firm and selling less, led to an overall tight supply, with few traders willing to sell at lower prices. The cost side also strengthened, providing solid support: high-grade NPI prices surged due to the news about nickel ore, while high-carbon ferrochrome prices increased due to overseas chrome ore tariff policies, and stainless steel scrap prices also followed the upward trend. The market dynamics were mainly driven by macro expectations and policy games in the futures, with the spot fundamentals supported by "low inventory and strong costs," but real demand from the terminal had not yet shown substantial improvement, indicating the market had entered a "sentiment premium" phase. In the short term, the market may hover at highs, but volatility risks have increased significantly.