[SMM Stainless Steel Daily Review] Capital Disturbances, Coupled with Off-Season Bearishness, Weakened Stainless Steel Futures and Spot Prices, Inventory Accumulated.

According to an SMM report on July 10, SS futures pulled back further. Although non-ferrous metals strengthened in general recently, SS remained under pressure from the capital side and extended its decline continuously. By the midday close, the most-traded SS futures contract settled at 14,320 yuan/mt. In the spot market, dragged down by the consistent drop in SS futures over recent days, stainless steel mills’ willingness to hold prices firm weakened clearly. Meanwhile, they lowered NPI purchase prices. Market confidence in the near-term outlook was notably insufficient, transactions were broadly in the doldrums, and traders generally offered discounts to push sales, with low-priced cargoes appearing frequently.

The most-traded SS futures contract stood at 14,345 yuan/mt as of 10:15 a.m., down 30 yuan/mt from the previous trading day, as the SS2608 contract. Spot premiums for 304/2B in Wuxi were in the 525-925 yuan/mt range. In the spot market, the average price of Wuxi cold-rolled 201/2B coil remained steady; Wuxi cold-rolled 304/2B coil with raw edges saw its average price drop 125 yuan/mt, while Foshan’s average shed 150 yuan/mt. The price of Wuxi cold-rolled 316L/2B coil was flat, while Hot-rolled 316L/NO.1 coil in Wuxi was quoted flat; cold-rolled 430/2B coil was flat in both Wuxi and Foshan.

This week, intensified macro capital-side disruption sent stainless steel futures down an independent weak track, with the futures markedly diverging from the pace of SHFE nickel and other nonferrous metals. The regular shift in capital sentiment drove wild swings in SS futures, with the key support level of 14,500 yuan/mt breached earlier, leading to a continued downward drift in overall center and a broadly bearish trading sentiment. In terms of spot and inventory, the breakdown and weakening of futures persistently dragged on spot market performance, with concentrated bearish fundamentals released during the off-season. The market has now entered the traditional consumption off-season, where inherently weak end-user demand, compounded by the persistent drop in futures, further dampened market confidence. Wait-and-see sentiment dominated among downstream terminals and purchase willingness remained sluggish. This week, mainstream steel mills abandoned their previous strategy of holding prices firm, actively lowering spot guidance prices and triggering a corresponding pullback in spot market quotes. Market transactions exhibited rapid cooling after intermittent, pulse-like releases, with a severe lack of sustained rigid demand, bringing overall trading back to a sluggish state. Against the backdrop of weak end-user purchases and obstructed destocking, the pace of inventory buildup in the market accelerated notably; social inventory continued to accumulate and spot fundamental pressures further surfaced. On the cost and profit side, steel product and raw material prices fell in tandem this week, with smelting margins at steel mills narrowing slightly but remaining positive. Affected by the pullback in spot prices and the pressure on steel product profitability, mainstream steel mills lowered their raw material purchase expectations, announcing NPI procurement prices at low levels, which propelled high-grade NPI market prices downward. Concurrently, stainless steel scrap purchase prices also pulled back, shifting the overall raw material cost center lower. Steel mill profits were slightly compressed WoW, but the industry as a whole did not fall into losses, and production profitability resilience remained. Overall, this week the stainless steel market exhibited a subdued pattern, with futures breaking below key levels, spot prices following the decline and softening, inventory buildup accelerating, and profit margins slightly narrowing. Macro liquidity disruptions drove futures to weaken independently. Off-season rigid demand weakness, steel mills' withdrawal from holding prices firm, and inventory buildup were the core bearish factors for spot. The short-term weak market pattern is hard to reverse, with futures continuing to consolidate on a subdued note and spot prices remaining under pressure.