[SMM Stainless Steel Daily Review] SS Futures Hold Up Well, Stainless Steel Pre-Holiday Stockpiling Sluggish as Downstream Players Hesitate Amid High Prices

SMM January 20 report, SS futures held up well in a strong oscillation pattern. Although it opened lower in the morning following SHFE nickel's decline, the night session saw impressive gains and limited losses during the day, maintaining a relatively strong position, closing at 14,345 yuan/mt. In the spot market, prices were raised in the morning due to support from high SS futures, but downstream purchase willingness was weak, not showing pre-holiday stockpiling demand; as futures weakened, traders, under pressure to sell and recover funds before the holiday, slightly lowered their quotes again. For 304 HRC, with tight supply and support from steel mill prices, its price trend was slightly stronger than that of cold-rolled products.

The most-traded SS futures contract held up well. At 10:30 am, SS2603 was quoted at 14,336 yuan/mt, down 25 yuan/mt from the previous trading day. In Wuxi, 304/2B spot premiums/discounts ranged from 85-285 yuan/mt. In the spot market, Wuxi 201/2B cold-rolled coils were all quoted at 8,450 yuan/mt; 304/2B cold-rolled coils (with edges) averaged 14,350 yuan/mt in Wuxi and 14,250 yuan/mt in Foshan; 316L/2B cold-rolled coils were 26,300 yuan/mt in both Wuxi and Foshan; 316L/NO.1 hot-rolled coils were 25,500 yuan/mt in Wuxi; 430/2B cold-rolled coils were 7,800 yuan/mt in both Wuxi and Foshan.

Recently, the Indonesian Ministry of Energy and Mineral Resources announced that although the RKAB quota was adjusted from the previously rumored 250 million mt to 260 million mt, the 2025 approval volume would still be significantly reduced, maintaining strong expectations of a tight nickel ore supply. The robust rise in SHFE nickel futures prices drove 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 strong market sentiment. Despite being in the traditional consumption off-season for stainless steel, the strong performance of the futures market broke the cautious atmosphere, leading spot stainless steel prices to follow suit, with trader quotes rising continuously. As spot stainless steel prices reached high levels, end-users' fear of high prices intensified, with weak inquiries and purchases, and wait-and-see sentiment still prevalent. However, with limited arrivals during the week, low confidence among traders leading to less purchasing, and a hold prices firm attitude amid the rising market, overall supply remained tight, with few traders willing to offer discounts. On the cost side, high-grade NPI prices surged due to nickel ore news, while high-carbon ferrochrome prices also rose, supported by overseas chrome ore tariff policies, and stainless steel scrap prices followed the upward trend of finished products. Market dynamics were mainly driven by macro expectations and policy games in the futures market, with the spot fundamentals having two bullish supports of "low inventory, strong costs," but real terminal demand had not yet seen substantial improvement, entering a phase of "sentiment premium."The short-term market may hover at highs, but the risk of volatility has increased significantly.