According to SMM on June 24, SS futures kept trending downwards and weakening. Non-ferrous metals futures extended their decline, and SS futures fell in tandem. Near the close, the market buzzed with news that Indonesia’s RKAB might raise nickel ore quotas, sending SHFE nickel and SS futures down further. At the close, the most-traded SS contract settled at 14,720 yuan/mt. In the spot market, sentiment was broadly weak amid the repeated downward probes on SS futures. Spot traders showed a strong willingness to sell to reduce their own inventory, and sales with price concessions increased, dragging down stainless steel spot quotes, though the sluggish transaction volumes remained hard to reverse.
SS futures’ most-traded contract. At 10:15 a.m., SS2608 stood at 14,740 yuan/mt, down 190 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi ranged 330-830 yuan/mt. On the spot market, the average price for cold-rolled 201/2B coil was flat. For cold-rolled 304/2B coil with rough edges, the average price fell 50 yuan/mt in Wuxi and 25 yuan/mt in Foshan. The price for cold-rolled 316L/2B coil dropped 100 yuan/mt in Wuxi. Quotes for hot-rolled 316L/NO.1 coil were flat in Wuxi. Cold-rolled 430/2B coil prices fell 50 yuan/mt in both Wuxi and Foshan.
This week, stainless steel futures and spot markets swung wildly. Macro expectations outside China repeatedly disrupted futures, and the tug-of-war between longs and shorts intensified. Overall, the market was shaped by macro-driven futures, volumes fluctuating with sentiment, supply tightening supporting spots, stable inventories, and slight margin recovery. Early in the week, macro tailwinds lifted the market, with the futures rebound spurring a recovery in spot transactions. Mid-week, hawkish expectations from the US Fed intensified, pushing futures down again, and end-user procurement turned cautious. Supported by steel mills holding prices firm and marginal supply contraction, spot prices edged up with limited fluctuations—a notable divergence between futures and spots. On futures, this week’s movements were entirely dictated by macro factors outside China, with the market rising first and then pulling back. Early in the week, the de-escalation of the US-Iran geopolitical conflict, combined with weaker US core CPI data, tempered inflation expectations and fuelled a broad rally in the non-ferrous sector. SS futures rebounded accordingly, repairing the prior weakness. But mid-week, the US Fed’s meeting signalled a hawkish stance, reigniting rate hike expectations, quickly wiping out macro tailwinds, and lifting risk-off sentiment, which pulled SS futures back and left them in the doldrums. On spots and inventories, spot transactions were highly correlated with futures this week, with phases of marked divergence. Early in the week, the rising futures spurred concentrated restocking by end-users, with transaction volumes swelling significantly. Mid-week, as futures weakened, wait-and-see sentiment grew, and trading quickly turned sluggish. Overall, stainless steel social inventories remained broadly stable this week. The supply side provided firm support to spots; steel mills were determined to hold prices firm, and with maintenance-led production cuts implemented during the month and some mills postponing production resumptions, industry supply tightened marginally, helping spot prices edge up and keeping fluctuations in check. Cost and profit side, raw material prices saw structural divergence this week, with finished steel prices recovering and boosting a slight recovery in steel mill profits. Raw material side, transaction activity for high-grade NPI picked up and prices rose, high-carbon ferrochrome prices weakened, stainless steel scrap prices held steady, so overall raw material costs experienced mild fluctuations. Combined with a slight rise in spot finished steel prices, this effectively offset part of the pressure from raw material fluctuations, driving a slight expansion in stainless steel mill profit margins. Overall, macro sentiment swung wildly this week, triggering wild swings in futures. Expectations of supply contraction supported spot resilience, and the market showed a prominent divergence between futures and spot. End-user transactions were entirely dependent on futures sentiment, and off-season demand resilience was insufficient and gradually weakened. The structural divergence in raw materials aided a slight recovery in steel mill profits, providing some support for industry production. In the short term, the market remained dominated by macro expectations, futures fluctuated frequently, and spot prices, supported by supply, maintained a relatively stable trend. Going forward, key focuses will be on US Fed policy expectations, the fluctuation pace of SS futures, the sustainability of downstream transactions, and the progress of steel mill maintenance and production resumptions on the ground.
