[SMM Stainless Steel Daily Review] Geopolitical Disruptions Combined with Cost Support Kept Stainless Steel Spot Prices Stable

SMM reported on March 27 that SS futures stopped falling and rebounded. Uncertainty remained high over news related to geopolitical conflicts, and futures were still expected to maintain a fluctuating trend. As of the midday close, prices were quoted at 14,395 yuan/mt. In the spot market, affected by fluctuations in SS futures, downstream rigid demand transactions had largely been released at the beginning of the week. At present, the arbitrage window in futures has closed, and stainless steel spot transactions accordingly pulled back. Stainless steel mills are currently operating at losses, and supported by costs, mills still showed a strong willingness to hold prices firm, with spot prices mostly remaining stable.

The most-traded SS futures contract stopped falling and rebounded. At 10:15 a.m., SS2605 was quoted at 14,355 yuan/mt, down 85 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi stood in the range of 165-365 yuan/mt. In the spot market, the average price of cold-rolled 201/2B coils in Wuxi was flat; for cold-rolled burr-edge 304/2B coils, the average price in Wuxi fell by 50 yuan/mt, and the average price in Foshan also fell by 50 yuan/mt; cold-rolled 316L/2B coils in Wuxi were flat; hot-rolled 316L/NO.1 coils were quoted flat in Wuxi; and cold-rolled 430/2B coils in both Wuxi and Foshan remained stable.

The stainless steel market has now entered the traditional peak consumption season. Downstream end-user transactions remained stable, but market sentiment turned cautious, and end-user enterprises lacked willingness to stockpile. Procurement was still mainly driven by restocking as needed, and the brisk trading pattern typical of the peak season had not emerged, leaving overall demand stable and neutral. On the futures side, repeated disruptions from the geopolitical conflict in Iran made it difficult for the impact on SS futures to be fully eliminated in the short term. However, supported by recent expectations that the conflict may ease, together with stimulus from news related to Indonesia's export tariffs and windfall tax on nickel products, SS futures held up well this week, but still failed to break out of the previous fluctuating range, with no clear breakout direction in the market. On the supply and inventory side, stainless steel mills still maintained relatively high production schedules in the short term, and the high supply pattern remained unchanged. Coupled with relatively high recent arrivals, although downstream transactions stayed stable, end-users lacked willingness to stockpile, and stainless steel social inventory posted another slight inventory buildup this week. Pressure to digest market inventory remained high, which both constrained the market to some extent and tested the pace of mill shipments. Cost side, recent strength in SHFE nickel prices pushed high-grade NPI quotes higher, but stainless steel mills themselves faced significant cost pressure, and the economic advantage of stainless steel scrap became more prominent. Mills showed low acceptance of high-priced NPI and remained cautious overall in procurement, so stainless steel production costs generally stayed stable without obvious fluctuations. Overall, the core contradiction in the stainless steel market this week lay in the mismatch between high supply, elevated inventory, and stable demand. Although there was some support on the cost side, it was difficult to provide sufficient momentum to drive finished steel prices higher; coupled with the continued strong uncertainty in macro news, overall market sentiment remained cautious, and stainless steel prices were expected to continue to show sideways movement in the short term.