[SMM Stainless Steel Daily Review] Indonesian Nickel Ore HMP Price Adjustment Drove Stainless Steel Futures and Spot Prices Higher

SMM April 15 reported that SS futures continued their strong upward probing trend. The market was further affected by the adjustment of Indonesia's nickel ore HMP benchmark price, with SHFE nickel and stainless steel futures strengthening further. As of the midday close, the most-traded SS contract was quoted at 14,850 yuan/mt. Spot market side, driven by the dual factors of SS futures consecutively breaking through the year's highs and rising NPI costs following the adjustment of Indonesia's nickel ore HMP benchmark price, cost support for stainless steel strengthened significantly. Market sentiment returned to actively bullish, and intraday quotes were raised. However, against the backdrop of rapidly rising prices, downstream end-users remained cautious. Although intraday inquiries were active and cargo pick-up for earlier orders was good, actual transactions remained cautious.

The most-traded SS futures contract strengthened. At 10:15 AM, SS2605 was quoted at 14,810 yuan/mt, up 220 yuan/mt from the previous trading day. Spot premiums for 304/2B in the Wuxi area ranged from 10-210 yuan/mt. In the spot market, the average price of cold-rolled 201/2B coils in Wuxi rose by 50 yuan/mt; for cold-rolled trimmed-edge 304/2B coils, the Wuxi average price rose by 200 yuan/mt and the Foshan average price rose by 100 yuan/mt; cold-rolled 316L/2B coils in Wuxi rose by 200 yuan/mt; hot-rolled 316L/NO.1 coils in Wuxi rose by 150 yuan/mt; cold-rolled 430/2B coils in both Wuxi and Foshan remained stable.

The stainless steel market was currently in the traditional peak season of "Golden March, Silver April." 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, and coupled with intensifying US inflation and discussions of rate hikes from the US Fed, market fluctuation risks increased. 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. Thanks to confidence recovery, active inquiries, and the end of concentrated month-end cargo allocation from the prior period, social inventory pulled back slightly this week to 978,700 mt, down 0.55% WoW. However, inventory destocking remained under pressure amid high supply, 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 remained stable. Stainless steel mills overall stayed at the breakeven edge, with the tug-of-war between upstream and downstream continuing. Overall, the core market contradiction this week lay in the interplay of macro uncertainties, high supply, and cautious demand. Although the peak season provided some support and the cost side formed a floor, it was difficult to push prices to rise; coupled with continuous macro disturbances and a wait-and-see attitude in the downstream that was hard to change, the market was expected to maintain a relatively stable trend in the short term. Going forward, attention should be paid to the progress of US-Iran negotiations, US Fed policy direction, and the actual release intensity of downstream demand.