According to SMM on February 24, SS futures continued their sharp upward trend. On the first trading day after the Chinese New Year holiday, supported by the strength in LME nickel during the holiday, SHFE nickel saw a post-holiday catch-up rally, with SS futures also strengthening in sync, ultimately closing at 14,085 yuan/mt. In the spot market, on the first post-holiday trading day, some traders were still on holiday, resulting in relatively sluggish actual transactions during the day. Spot quotations followed the rise in SS futures, and market confidence improved.
The most-traded SS futures contract strengthened and tested higher levels. At 10:30 a.m., the SS2604 contract was quoted at 14,125 yuan/mt, up 360 yuan/mt from the previous trading day. In Wuxi, the spot premiums/discounts for 304/2B were in the range of 145-345 yuan/mt. In the spot market, the average price for cold-rolled 201/2B coil in Wuxi was reported at 8,500 yuan/mt; for cold-rolled mill-edge 304/2B coil, the average price in Wuxi was 14,200 yuan/mt, while in Foshan it was 14,150 yuan/mt; for cold-rolled 316L/2B coil in Wuxi, the price was 26,600 yuan/mt, and in Foshan it was also 26,600 yuan/mt; for hot-rolled 316L/NO.1 coil, the price in Wuxi was reported at 25,750 yuan/mt; for cold-rolled 430/2B coil, the price in both Wuxi and Foshan was 7,800 yuan/mt.
During the Chinese New Year holiday, the domestic stainless steel market entered a seasonal closure phase, with the SHFE also suspending trading concurrently. Spot transactions halted, and prices showed no significant fluctuations. Overall, the pre-holiday market exhibited a pattern of strong futures, stagnant spot trading, weak supply and demand, and significant inventory buildup. Post-holiday, the market is expected to gradually restart, with the overall trend projected to fluctuate upward, though the upward momentum may be constrained. Before the holiday, SHFE nickel and stainless steel futures strengthened driven by news of tightened nickel ore quotas in Indonesia, but later pulled back slightly due to profit-taking by funds. On the supply side, multiple stainless steel mills concentrated on annual equipment maintenance, leading to industry expectations of a significant decline in the production schedule. On the demand side, downstream end-users also entered the holiday period simultaneously, halting purchases, resulting in a weak supply-demand dynamic. A slight increase in raw material prices provided some cost support, but steel mills did not experience significant losses. Combined with pre-holiday holidays for downstream users and traders leading to notable social inventory buildup, price increases were constrained. After the holiday, the spot market is gradually restarting. In the first week, some traders remain on holiday, and market transactions are expected to gradually increase. Spot prices are anticipated to hold up well in the short term with consolidation, and recover gradually over the medium to long term following the pace of downstream resumption. Supportive factors for the futures market remain. Against the backdrop of a relatively weak market, downstream end-users were cautious with pre-holiday stockpiling and are expected to enter a restocking phase post-holiday. Coupled with the approaching traditional peak consumption season of "Golden March, Silver April," a pattern where demand recovers first followed by supply is likely to emerge, and stainless steel prices are expected to continue rising.
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