[SMM Stainless Steel Daily Review] New Nickel Ore Policy Boosted Stainless Steel Futures Prices, Cautious Downstream Demand Kept Transactions Weak and Spot Prices Stable

SMM April 14 reported that SS futures continued their strong upward probing trend. Influenced by yesterday's news of the adjustment to Indonesia's nickel ore HPM formula, both SHFE nickel and SS futures rose. As of the midday close, the most-traded SS contract was quoted at 14,600 yuan/mt. Spot market side, driven by the consecutive upward probing of SS futures and the adjustment to Indonesia's nickel ore HPM formula, the market expected NPI smelting costs to rise, strengthening confidence in cost support for stainless steel. However, downstream acceptance of high prices remained limited, and spot quotes had not yet followed the upward move, with overall transactions remaining stable.

On Friday's night session, driven by capital flows, SS futures surged sharply, approaching 14,590 yuan/mt, before pulling back with fluctuations. As of the midday close, the contract was quoted at 14,600 yuan/mt. Spot market side, although SS futures surged significantly driven by capital flows, stainless steel fundamentals did not change notably. While spot quotes followed futures higher, downstream clients' wait-and-see sentiment intensified, transactions were sluggish, and most deals were driven by futures-spot arbitrage.

The most-traded SS futures contract strengthened. At 10:15 AM, SS2605 was quoted at 14,590 yuan/mt, down 20 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi ranged from 30-230 yuan/mt. In the spot market, the average price of cold-rolled 201/2B coils in Wuxi held steady; for cold-rolled untrimmed 304/2B coils, average prices in both Wuxi and Foshan held steady; cold-rolled 316L/2B coils in Wuxi held steady; hot-rolled 316L/NO.1 coils in Wuxi held steady; cold-rolled 430/2B coils in both Wuxi and Foshan held steady.

The stainless steel market is currently in the traditional peak season of "Golden March and Silver April." In the short term, macro tailwinds boosted confidence recovery, and spot inquiry activity increased. However, cautious sentiment among downstream end-users persisted, with purchases mainly driven by rigid demand. Acceptance of high-priced cargoes was poor, and transactions relied on low-priced resources, with no significant volume increase overall. Futures side, the US-Iran conflict de-escalated this week, with both sides reaching a two-week ceasefire agreement and initiating negotiations. Macro tailwinds supported SS futures, and market sentiment eased somewhat. However, geopolitical risks were not fully eliminated, compounded by intensifying US inflation and discussions of rate hikes from the US Fed, increasing market fluctuation risks. Futures struggled to sustain their rise, providing limited support to the spot market. Supply and inventory side, steel mill production schedules in April stayed high, and supply pressure remained unrelieved. Benefiting from confidence recovery, active inquiries, and the end of concentrated month-end cargo distribution, social inventory pulled back slightly this week to 978,700 mt, down 0.55% WoW. However, under the backdrop of high supply, inventory destocking remained under pressure, and steel mill shipments faced challenges. Cost side, high-grade NPI had price support due to losses, but steel mills faced significant cost pressure with low purchase willingness, keeping high-grade NPI prices subdued. Stainless steel scrap and high-carbon ferrochrome prices held steady. Stainless steel mills overall remained on the edge of breakeven, with the tug-of-war between upstream and downstream continuing. Overall, the core market contradiction this week lay in the interplay between macro uncertainties and high supply coupled with cautious demand. Although the peak season provided some support and the cost side formed a floor, it was difficult to push prices to rise; compounded by continuous macro disturbances and persistent wait-and-see attitudes among downstream buyers, the market is expected to maintain a relatively stable trajectory in the short term. Going forward, attention should be paid to the progress of US-Iran negotiations, US Fed policy directions, and the actual release momentum of downstream demand.