[SMM Stainless Steel Daily Review] SS Futures Fell and Pulled Back, Coupled with Steel Mill Price Adjustments, and Strong Wait-and-See Sentiment Among Downstream Buyers

SMM reported on March 16 that SS futures showed a downward pullback. Although the Friday night session was relatively stable, Monday's opening was dragged down by a broad decline across the nonferrous metals sector, with SS also pulling back to 14,185 yuan/mt as of the midday close. In the spot market, affected by the decline in SS futures and a major mainstream stainless steel mill cutting its morning guidance prices by 200 yuan/mt across the board, market retail quotations edged lower. Price fluctuations fueled stronger wait-and-see sentiment among downstream players, and intraday transactions were weak. However, market feedback indicated that earlier transactions had been generally stable, and together with relatively firm expectations for the cost side of stainless steel, most market participants had not expected this round of price cuts. Traders' declines in spot quotations were smaller than the reduction in guidance prices.

The most-traded SS futures contract moved lower and pulled back. At 10:15 a.m., SS2605 was quoted at 14,045 yuan/mt, down 230 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi were in the range of 245-445 yuan/mt. In the spot market, cold-rolled 201/2B coils in Wuxi were all basically stable; for cold-rolled burr-edge 304/2B coils, the average price in Wuxi fell by 50 yuan/mt and the average price in Foshan fell by 50 yuan/mt; cold-rolled 316L/2B coils in Wuxi were stable; for hot-rolled 316L/NO.1 coils, Wuxi quotations were stable; and cold-rolled 430/2B coils in both Wuxi and Foshan were basically stable.

As the traditional peak consumption season of "Golden March and Silver April" arrived, the stainless steel market entered a window for demand recovery, and downstream end-users gradually recovered. Recently, inquiries and purchases became noticeably more active, but stainless steel spot prices generally remained basically stable without obvious fluctuations. End-user procurement mainly followed rigid demand, and the market had not yet shown signs of a full peak-season boom, with some wait-and-see sentiment still lingering. On the futures side, affected by multiple factors including the continued escalation of geopolitical conflict in Iran, the US restarting its tariff war, and intensified fluctuations in the US dollar exchange rate, uncertainty in macro news increased significantly. This week, SS futures moved sideways within a range, showing mixed performance and no clear direction. Inventory side, stainless steel social inventory pulled back this week, driven by recovering downstream demand and pick-up of earlier orders, ending the sharp accumulation trend seen since February. However, overall inventory remained high, and destocking pressure had not been fully eased. Although inventory stopped rising and pulled back, releasing positive signals and boosting market confidence to some extent, high inventory levels combined with expected supply growth in March still constrained the market. Traders maintained a steady pace of shipments, with no aggressive selling.

Supply side, earlier production cuts and maintenance at steel mills had fully ended, and stainless steel production schedules for March were expected to remain high, with pressure from supply growth gradually being released. Affected by the sharp buildup in social inventory in February, stainless steel mills are currently focusing on shipping at stable prices. Recently, mainstream stainless steel mills had consecutively kept guidance prices unchanged, proactively controlling price fluctuations, accelerating inventory turnover, and easing the dual pressure from the supply side and inventory side. However, expectations of high supply within the month still formed a potential drag on the market. Cost support continued to strengthen. Recently, mainstream stainless steel mills offered relatively low procurement prices for high-grade NPI, which to some extent restrained its upward momentum. However, nickel ore prices remained elevated, driving NPI prices to continue edging up slowly. High-carbon ferrochrome prices also strengthened under the dual support of tight spot availability and rising chrome ore prices, further reinforcing cost support for stainless steel. Overall, the core contradiction in the stainless steel market this week was the mismatch between expectations for high supply, the pace of demand recovery, and the progress of inventory drawdown. Although the market formally entered the traditional peak consumption season, with recovering downstream demand, inventory stopping rising and pulling back, and relatively strong cost support providing positive factors, uncertainty in macro news remained high and the overall market stayed cautious. Coupled with elevated supply during the month and generally high inventory, stainless steel prices are expected to remain generally stable with slight rise.