[SMM Stainless Steel Daily Review] SS Futures Fluctuate Downward After Surging, Stainless Steel Spot Cargo Struggles to Catch Up Amid Demand-Side Constraints

SMM January 22 report, SS futures showed a retreat from highs. Although the night session initially continued the strong trend seen in the afternoon of the previous day, it subsequently fluctuated downward. In the spot market, driven by the significant rise in SS futures, traders raised their quotes; however, with the pullback in futures today, actual transactions were weak. Recently, stainless steel social inventory has been running at low levels, coupled with limited arrivals, which restricted some forward orders for physical delivery, pushing futures prices to stage a spike. However, real demand from downstream end-users is weak, and high prices have made them cautious, leading to most goods circulating among traders, gradually accumulating the risk of a future correction.

The most-traded SS futures contract pulled back slightly. At 10:30 AM, SS2603 was quoted at 14,590 yuan/mt, up 225 yuan/mt from the previous trading day. In Wuxi, 304/2B spot premiums and discounts ranged between 80-180 yuan/mt. In the spot market, Wuxi cold-rolled 201/2B coils were all quoted at 8,500 yuan/mt; cold-rolled 304/2B coils, Wuxi average price 14,550 yuan/mt, Foshan average price 14,450 yuan/mt; Wuxi cold-rolled 316L/2B coils 26,500 yuan/mt, Foshan 26,500 yuan/mt; hot-rolled 316L/NO.1 coils, Wuxi 25,600 yuan/mt; Wuxi and Foshan cold-rolled 430/2B coils both 7,800 yuan/mt.

Recently, the Indonesian Ministry of Energy and Mineral Resources announced that although the RKAB quota was adjusted from the previously rumored 2.5 billion tons to 2.6 billion tons, the 2025 approval volume is still significantly reduced, maintaining strong expectations of nickel ore supply shortages. SHFE nickel futures prices surged, driving SS stainless steel futures to also spike, with the most-traded contract hitting the daily limit, reaching a new high since June 2024, fueled by market sentiment. Despite being in the traditional consumption off-season for stainless steel, the robust performance of the futures market broke the previous cautious atmosphere, leading spot stainless steel prices to follow suit, with trader quotes rising continuously. With spot stainless steel prices already at high levels, end-user enterprises' fear of high prices has intensified, resulting in weak inquiries and purchases, and the wait-and-see sentiment in the market has not completely dissipated. However, with limited arrivals during the week, combined with traders' lack of confidence in earlier purchases and a hold prices firm attitude amid the rising market, overall market supply is tight, and there are few instances of traders selling at lower prices to attract buyers. The cost side also strengthened, further solidifying support: high-grade NPI prices rose sharply due to nickel ore news, while high-carbon ferrochrome prices also increased, supported by overseas chrome ore tariff policies, and stainless steel scrap prices followed the upward trend of finished products. Market dynamics are mainly driven by macro expectations and policy games in the futures market, with the spot fundamentals having two bullish supports of "low inventory and strong costs," but real demand from the terminal has not yet shown substantial improvement, and the market has entered a "sentiment premium" phase. The short-term market may hover at highs, but the risk of volatility has increased significantly.