SMM reported on March 2 that the SS futures fluctuated upward. Affected by the escalation of geopolitical conflicts in the Middle East over the weekend, precious metals and crude oil-related futures rose first, followed by non-ferrous metals, with SS futures strengthening as well, closing at 14,385 yuan/mt. In the spot market, driven by the strong performance of SS futures and the further surge in high-grade NPI raw material prices, stainless steel spot quotations increased; however, due to insufficient downstream end-user operations, overall purchasing attitudes remained cautious. Despite this, under the multiple positive factors of cost support, expectations for the peak season of "Golden March, Silver April," and recent rises in futures, traders generally held an optimistic outlook for the future.
The most-traded SS futures contract strengthened and probed higher. At 10:30 AM, SS2604 was quoted at 14,160 yuan/mt, up 10 yuan/mt from the previous trading day. The spot premiums/discounts for 304/2B in Wuxi ranged between 360-560 yuan/mt. In the spot market, Wuxi cold-rolled 201/2B coils remained stable; the average price of cold-rolled 304/2B coils with trimmed edges in Wuxi and Foshan both increased by 50 yuan/mt; the price of cold-rolled 316L/2B coils in Wuxi rose by 200 yuan/mt; the price of hot-rolled 316L/NO.1 coils in Wuxi increased by 300 yuan/mt; while the prices of cold-rolled 430/2B coils in both Wuxi and Foshan remained unchanged.
The stainless steel market gradually recovered, with SS futures strengthening and probing higher, fueled by rising expectations for the traditional peak consumption season of "Golden March, Silver April" and ongoing developments regarding Indonesian nickel ore, leading to a strong bullish sentiment among market participants. However, the pace of recovery in the spot market was slow, with some traders and downstream end-users yet to resume operations, resulting in incomplete restoration of market transaction activity. Only a small number of essential orders were transacted during the week, presenting a clear pattern of "strong futures, weak spot." On the inventory side, there was a significant seasonal inventory buildup in the social inventory of stainless steel, mainly due to the suspension of transactions during the Chinese New Year holiday, continuous arrivals of goods, and pending cargo pick-ups. According to industry norms, inventory buildups before and after the Chinese New Year are normal, and the current buildup did not exceed market expectations, leaving market confidence unshaken. Traders did not engage in panic selling, and short-term inventory pressure remained manageable. On the supply side, domestic stainless steel mills conducted concentrated annual maintenance in February, implementing substantial production cuts, which significantly reduced output, alleviating short-term supply-side pressure. However, it is important to note that in March, steel mills will enter a phase of concentrated resumption of production, with expected significant increases in output, which will test the demand absorption capacity during the "Golden March, Silver April" peak season, potentially leading to a phased adjustment in the supply-demand pattern. Cost support continued to strengthen, with ongoing developments related to Indonesian nickel ore driving steady increases in ore prices, thereby raising the production costs of NPI, with high-grade NPI prices climbing continuously. Although the high-grade NPI market saw limited transactions this week, with major stainless steel mills not yet recognizing the current high prices and showing low purchase willingness, there is a strong bullish sentiment in the market. The expectation of tight raw material supply makes it difficult for prices to decline, providing robust support for stainless steel production costs, allowing steel mills to maintain reasonable profitability. Overall, the core characteristic of the stainless steel market this week was "strong expectations, weak reality." Strengthening futures, optimistic peak season expectations, and strong cost-side support collectively boosted market confidence; however, weak spot transactions, significant inventory buildup, and the supply pressure from concentrated resumption of production by steel mills in March also imposed notable constraints on the market. The key focus of the current market competition centers on the pace of downstream demand recovery after the holiday, the progress of inventory digestion, and the actual resumption of production by steel mills in March. It will be crucial to closely monitor these factors to determine the direction of the market trend.
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