[SMM Stainless Steel Daily Review] SS Futures Rose Sharply to a New Stage High, Spot Stainless Steel Followed the Rally with Cautious Demand

SMM, April 17: SS futures continued their strong upward momentum. Market sentiment was bullish. Starting from the night session, SS futures embarked on a strong upward trend, reaching an intraday high of 15,175 yuan/mt, a new high since 2023. As of the midday close, the most-traded SS contract was quoted at 15,105 yuan/mt. Spot market, driven by the sharp rally in SS futures breaking through to new highs, spot traders raised their quotes in tandem. Although downstream end-user clients became more cautious in purchasing due to the rapid price increase, procurement volume from arbitrage institutions engaging in both spot and futures markets increased. Moreover, the expanded profit margins after the price rise allowed traders to offer greater discounts, with some lower-specification products being shipped at reduced prices. Currently, SS futures surged sharply driven by capital inflows, with gains significantly outpacing the raw material side, posing certain pullback risks in the market.

The most-traded SS contract strengthened. At 10:15 AM, SS2605 was quoted at 15,095 yuan/mt, up 305 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi ranged from -125-75 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 average price in Wuxi rose by 150 yuan/mt, and in Foshan by 150 yuan/mt; cold-rolled 316L/2B coils in Wuxi held steady; for hot-rolled 316L/NO.1 coils, Wuxi quotes rose by 50 yuan/mt; cold-rolled 430/2B coils in both Wuxi and Foshan held steady.

The stainless steel market was currently in the traditional peak season of "Golden March and Silver April." Driven by futures, spot quotes strengthened, but downstream end-users maintained a cautious wait-and-see sentiment, concerned about short-term price fluctuations. Procurement did not show a significant increase in volume, with transactions mainly consisting of arbitrage purchases by trading firms engaging in both spot and futures market and cargo pick-up of earlier orders. Overall demand did not fully match the price gains. Futures side, Indonesia officially revised the nickel ore Harga Patokan Mineral (HPM) calculation formula this week, and nickel ore prices were expected to rise notably, pushing up costs of related nickel-based products. Driven by this positive development, both SHFE nickel and SS futures rose markedly, with SS futures briefly breaking through the yearly high, significantly boosting market sentiment. Supply and inventory side, stainless steel mill production schedules remained at relatively high levels, with supply pressure persisting. Thanks to increased market inquiries driven by futures and higher cargo pick-up of earlier orders, stainless steel social inventory further pulled back to 961,100 mt this week, down 1.8% WoW. Cost side, affected by the adjustment of Indonesia's nickel ore HPM, high-grade NPI prices stopped falling and moved higher. Stainless steel mills increased their NPI procurement volume, further reinforcing price support. The stainless steel scrap market showed a steady-to-rising trend, rising in tandem driven by its cost advantage over high-grade NPI and the strengthening of stainless steel finished product prices. Stainless steel production costs shifted upward, but the increase fell short of the rise in finished product prices, and steel mill profits gradually recovered. Overall, the core market contradiction this week lay in the interplay between cost expectation-driven rallies and insufficient real downstream demand amid high supply levels. Although favorable Indonesian nickel ore policies drove futures higher and provided cost-side support, the cautious sentiment among downstream end-users remained difficult to change. Combined with the unchanged high production schedule pattern at steel mills, stainless steel prices are expected to stabilize at highs in the short term, with certain resistance to further upward exploration.