[SMM Stainless Steel Daily Review] SS Futures Rose Successively After the Holiday, Spot Stainless Steel Market Activity Increased

On February 25, SMM reported that SS futures continued their sharp upward trend. Nonferrous metals futures generally rose, and SS futures followed suit, approaching 14,300 yuan/mt before the midday close. In the spot market, the strength in SS futures drove traders to raise their offers further, boosting confidence in the stainless steel spot market. Additionally, as industry participants returned to work after the holiday, inquiry and transaction activity increased during the day.

The most-traded SS futures contract strengthened and climbed. At 10:30 a.m., the SS2604 contract was quoted at 14,235 yuan/mt, up 110 yuan/mt from the previous trading day. In the Wuxi region, spot premiums/discounts for 304/2B were in the range of 135-335 yuan/mt. In the spot market, the average price for cold-rolled 201/2B coils in Wuxi was 8,500 yuan/mt; for cold-rolled trimmed 304/2B coils, the average price in Wuxi was 14,300 yuan/mt, and in Foshan, 14,300 yuan/mt; for cold-rolled 316L/2B coils in Wuxi, the price was 26,950 yuan/mt, and in Foshan, 26,950 yuan/mt; for hot-rolled 316L/NO.1 coils in Wuxi, the price was 26,100 yuan/mt; for cold-rolled 430/2B coils, 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 lull, with the SHFE also closed, spot trading suspended, and no significant price fluctuations. Overall, before the holiday, the market showed a pattern of strong futures, stagnant spot trading, weak supply and demand, and significant inventory buildup. After the holiday, the market is expected to gradually restart, with an overall trend likely to fluctuate upward, though the rise may be constrained. Before the holiday, SHFE nickel and stainless steel futures strengthened on news of tightened nickel ore quotas in Indonesia, but later pulled back slightly due to profit-taking. On the supply side, several steel mills conducted concentrated annual equipment maintenance, leading to expectations of a significant drop in the production schedule. On the demand side, downstream end-users also entered the holiday, halting purchases, resulting in a weak supply-demand balance. A slight rise in raw material prices provided some cost support, but mills did not face 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, with some traders still on holiday in the first week. Market transactions are expected to gradually increase, and spot prices are likely to hold up well in the short term, with a medium to long-term recovery pace tied to downstream resumption. Support for futures remains favorable. Against a weak market backdrop, downstream end-users were cautious in pre-holiday stockpiling and are expected to enter a restocking phase after the holiday. Coupled with the approaching traditional peak consumption season of "Golden March, Silver April," demand may recover first, followed by supply, potentially leading to further increases in stainless steel prices.