According to SMM on June 25, SS futures continued to decline and weaken. Nonferrous metals futures extended their losses, and combined with the impact of yesterday's news on Indonesian nickel ore quotas, SS futures fell further. As of the midday close, the most-traded SS futures contract closed at 14,640 yuan/mt. In the spot market, dampened by the continuous decline in futures and the arrival of the traditional consumption off-season, the sluggish trading was hard to improve, and traders showed a strong willingness to sell. Although a mainstream stainless steel mill kept its guidance price unchanged in the morning, spot quotes still fell along with futures, and trading remained sluggish.
SS futures most-traded contract. At 10:15 am, SS2608 was at 14,600 yuan/mt, down 140 yuan/mt from the previous trading day. The spot premiums for 304/2B in Wuxi were in the range of 370-970 yuan/mt. In the spot market, the average prices were: cold-rolled 201/2B coil in Wuxi (flat); cold-rolled 304/2B coil with rough edges (Wuxi: -50 yuan/mt, Foshan: -50 yuan/mt); cold-rolled 316L/2B coil in Wuxi (-100 yuan/mt); hot-rolled 316L/NO.1 coil in Wuxi (-50 yuan/mt); cold-rolled 430/2B coil in both Wuxi and Foshan (flat).
This week, stainless steel futures and spot experienced wild swings, with overseas macro expectations repeatedly disturbing the market, and the tug-of-war between longs and shorts intensified. Overall, the market showed a pattern of macro-driven futures movement, transaction volumes fluctuating with sentiment, supply tightening supporting spot prices, stable inventory, and a slight recovery in profits. At the beginning of the week, macro tailwinds boosted the market, with the futures rebound driving a recovery in spot trading; mid-week, as the hawkish expectations from the US Fed strengthened, futures weakened again, and end-user procurement became more cautious. Supported by steel mills holding prices firm and marginal supply contraction, spot prices edged up slightly with limited fluctuations, exhibiting significant divergence between futures and spot. On the futures side, this week's trading was entirely dominated by overseas macro factors, with the market initially rising before falling. Early in the week, the easing of US-Iran geopolitical tensions, coupled with weaker US core CPI data, led to expectations of cooling inflation, boosting the entire nonferrous metals sector and allowing SS futures to rebound and repair earlier weakness. However, mid-week, the US Federal Reserve's FOMC meeting released hawkish signals, reigniting rate hike expectations, rapidly erasing macro tailwinds, and driving up risk-aversion sentiment, which dragged SS futures back down, resulting in an overall weak and volatile trend. In terms of spot and inventory, this week's spot trading was highly correlated with futures trends, with clear periodic divergence. Early in the week, the futures rally spurred concentrated restocking by end-users, leading to a significant surge in market trading; after mid-week when futures weakened, wait-and-see sentiment grew, and trading quickly turned sluggish. Overall, stainless steel social inventory remained stable this week. The supply side provided strong support for spot prices: steel mills were firm in holding prices, and with production cuts from maintenance taking effect during the month and some production resumptions delayed, the industry's supply tightened marginally, helping spot prices edge up slightly with controlled volatility. Cost and profit side, raw material prices diverged structurally this week, and the recovery in finished steel prices drove a slight repair in steel mill profits. Within raw materials, trading activity in high-grade NPI picked up and its price rose, high-carbon ferrochrome prices softened, and stainless steel scrap prices held steady, resulting in mild overall raw material cost fluctuations. Combined with a modest rise in spot steel prices, this effectively offset some of the pressure from raw material fluctuations, leading to a slight expansion in stainless steel mill profit margins. Overall, this week, volatile macro sentiment triggered wild swings in the futures market, expectations of supply contraction supported spot resilience, and the divergence between futures and physical markets became pronounced. End-user transactions were entirely dependent on futures sentiment, with off-season demand lacking resilience and gradually weakening. The structural divergence in raw materials helped steel mill profits partially recover, providing some support for industry production. In the short term, the market remains dominated by macro expectations, with futures fluctuating frequently; spot prices, supported by supply, maintain a relatively stable trend. Going forward, key focuses will be on US Fed policy expectations, the pace of SS futures fluctuations, the sustainability of downstream transactions, and the progress of steel mill maintenance and production resumptions.
![[SMM Analysis]China-Indonesia Steel Price Spread Inverted, Overseas Demand Still Shows No Improvement](https://imgqn.smm.cn/usercenter/wSpkX20251217171718.png)
