[SMM Stainless Steel Daily Review] SS Futures Pull Back Sharply, Stainless Steel Spot Prices Hold Steady Ahead of Holiday

SS futures pulled back sharply; stainless steel spot offers steadied near holiday. SMM Jan 30 – SS futures extended losses, dragged lower by a broad rout in precious-metals and base-metals futures and briefly touching 14,110 yuan/mt. In the spot market, the futures slide and completed pre-holiday purchasing kept turnover sluggish. Yet traders hold lean inventories and mills plan February cuts, so most quotes were left unchanged. Social inventory rose 1.05% WoW to 853,000 mt.

The most-traded SS contract fell sharply. At 10:30 a.m. SS2603 was quoted at 14,295 yuan/mt, down 125 yuan/mt from the previous session. In Wuxi, 304/2B spot premiums/discounts ranged 225-425 yuan/mt. Spot prices: Wuxi cold-rolled 201/2B coil at 8,500 yuan/mt; cold-rolled trimmed 304/2B coil at 14,400 yuan/mt in Wuxi and 14,350 yuan/mt in Foshan; cold-rolled 316L/2B coil at 26,650 yuan/mt in both cities; hot-rolled 316L/NO.1 coil in Wuxi at 25,800 yuan/mt; cold-rolled 430/2B coil at 7,800 yuan/mt in both Wuxi and Foshan.

This week, with Chinese New Year approaching and risk-averse sentiment rising, bulls took profits en masse, leaving SS futures without upward momentum and in the doldrums. Visible capital flight further capped upside room. Consequently, spot prices stayed high but their rise stalled, and sentiment shifted from cautious to conservative.

Spot fundamentals offered scant support; the pre-holiday market was sluggish, marked by “high prices, low volume.” Downstream stockpiling is largely done, spot prices are elevated, end-users fear high levels and purchasing interest is weak, so real turnover is thin. Most traders plan to close before the first February week, further sapping activity. Social inventory rebounded slightly but remains historically low. Cargoes are mainly held by arbitrage desks; actual end-user buying is small, leaving ample supply stuck in the distribution chain rather than flowing to consumption, so end-use demand provides little support and market gaming intensifies. Supply side: holiday effects have already cut February output, but downstream sectors will also shut for the holiday, so the demand lull fully offsets the supply reduction, offering no near-term price support; the net impact is modest. Cost side, the overall trend showed a divergence. The rise in high-grade NPI slowed significantly this week, with stainless steel mills showing a weaker willingness to purchase at high raw material prices, leading to relatively light actual transactions; high-carbon ferrochrome, on the other hand, continued its upward trend, but its overall support for stainless steel prices had weakened, with the cost center only shifting slightly upward. Overall, the stainless steel market this week was mainly driven by the capital movements in futures, with the support from the spot fundamentals being relatively weak. With pre-holiday risk aversion, weak end-use demand, and transactions stagnating in the circulation phase, the market lacked core fundamental support, and short-term activity was set to decline further, putting downward pressure on spot prices.