[SMM Stainless Steel Daily Review] SS Futures in the Doldrums, Stainless Steel Traders on Holiday One After Another, Trading Sluggish

SMM February 6 news, SS futures were in the doldrums. During the day, nonferrous futures pulled back overall, and SS futures followed the decline, closing down at 13,670 yuan/mt. In the spot market, although futures pulled back, traders were gradually leaving for the holiday, mostly in the closing stages; trading was sluggish during the day, and quotations mostly held steady.

The most-traded SS futures contract was in the doldrums. At 10:30 a.m., SS2603 was quoted at 13,755 yuan/mt, down 5 yuan/mt from the previous trading day. In Wuxi, spot premiums/discounts for 304/2B were in the range of 415-615 yuan/mt. In the spot market, the average price of cold-rolled 201/2B coil in Wuxi was 8,500 yuan/mt; the average price of cold-rolled mill-edge 304/2B coil was 14,100 yuan/mt in Wuxi and 14,050 yuan/mt in Foshan; the price of cold-rolled 316L/2B coil in Wuxi was 26,600 yuan/mt, and in Foshan 26,600 yuan/mt; the price of hot-rolled 316L/NO.1 coil in Wuxi was 25,750 yuan/mt; the price of cold-rolled 430/2B coil in both Wuxi and Foshan was 7,800 yuan/mt.

This week, repeated fluctuations in macro sentiment, combined with a sharp pullback in precious metal prices, dragged down nonferrous futures overall, and stainless steel futures also showed wild swings. They once hit the limit down at the beginning of the week, and although a corrective rebound gradually unfolded afterward, the overall weak trend did not fundamentally reverse. The spot market was dragged down by futures fluctuations and moved lower in sync; market sentiment fluctuated with futures, overall tending to be cautious and conservative. Approaching the Chinese New Year holiday, some traders had already left the market for the holiday this week; market trading activity continued to decline, and only during brief periods of corrective rebound in futures did downstream users conduct small-scale restocking for rigid demand; overall trading remained sluggish. Inventory side, social inventory of stainless steel showed a slight buildup this week, but overall inventory levels remained at historically low levels, and traders' inventory pressure was relatively limited; coupled with market expectations for a positive consumption season after the holiday ("Golden March, Silver April"), there was no panic selling, which to some extent alleviated downward pressure on spot prices. In February, stainless steel mills will gradually start their annual maintenance plans, and planned production is expected to decrease significantly; however, downstream end-use industries are also entering the Chinese New Year holiday, and demand will stagnate temporarily; the positive effect of supply reduction is offset by demand contraction, providing limited support to market prices. Cost side, prices of high-grade NPI and stainless steel scrap pulled back, and stainless steel production costs declined accordingly; currently, mills can still maintain marginal profits, and the cost side provides some bottom support. Overall, this week, the stainless steel market was dominated by futures and macro sentiment, with relatively weak fundamental support from the spot market; coupled with sluggish pre-holiday trading, traders leaving for the holiday, and other factors, the market was in the doldrums; however, favorable factors such as relatively low inventory, positive post-holiday expectations, and cost support effectively limited the downside room for prices. In the short term, sentiment-driven capital flows and fluctuations in futures will continue to dominate market trends. Going forward, close attention should be paid to the macroeconomic trajectory and the pace of recovery in downstream demand after the holiday.