[SMM Analysis] Futures Lack Momentum to Rise Further, Pre-Holiday Demand Stalls, and Stainless Steel Social Inventory Accumulation Intensifies

SMM February 5th report, this week (January 30, 2026 - February 5, 2026), the total inventory of the two major stainless steel markets in Wuxi and Foshan showed a further trend of inventory buildup, increasing from 853,000 mt on January 29, 2026 to 868,600 mt on February 5, 2026, up 1.83% WoW.

This week, social inventory of stainless steel continued to rise. The momentum for SS futures to further explore upward weakened, leading to a pullback in spot quotations, with market confidence also pulling back. Coupled with the market environment before the Chinese New Year holiday, the contradictions at both ends of supply and demand became more pronounced. Just before the Chinese New Year holiday, the market was already sluggish in terms of transactions. The weak performance of both futures and spot prices made it difficult for the transaction situation to see a significant reversal. Although there was a slight recovery in futures prices, which led to a brief and small increase in inquiries, most of these were for downstream restocking of essential needs, and overall trading volume remained low. Moreover, end-use purchases had largely come to an end, with substantive purchase intentions nearly at a standstill. In terms of cargo flow, the main arrivals at steel mills this week were for arbitrage purchases by futures-spot institutions. These cargoes did not effectively enter the end-use consumption sector but instead accumulated in the circulation stage, further boosting the accumulation of social inventory. Currently, the market is dominated by a wait-and-see sentiment. The lack of upward momentum in futures and the pullback in spot prices have further suppressed market trading vitality. Overall, the current market is significantly influenced by multiple factors including weak futures, spot price pullbacks, stagnant end-use demand, and poor cargo flow. The supply-demand imbalance is quite prominent, and the market's wait-and-see atmosphere remains strong, making it difficult to reverse the short-term trend of inventory buildup.