[SMM Stainless Steel Daily Review] SHFE Nickel Drives SS Futures Higher, Spot Stainless Steel Follows While Downstream Purchases Remain Cautious

According to SMM on July 16, SS futures displayed a strengthening and upward trending pattern. Driven by the strength of SHFE nickel, SS rose in tandem, and as of the close, the most-traded SS contract settled at 14,795 yuan/mt. Spot market, although SS futures were stable in the morning with spot prices holding steady, as SHFE nickel surged at midday, spot prices followed suit. Despite rapid price fluctuations, end-user purchasing remained cautious, but low-priced cargo in the market had largely disappeared.

SS futures most-traded contract. At 10:15 a.m., SS2608 was reported at 14,665 yuan/mt, up 5 yuan/mt from the previous trading day. For 304/2B in Wuxi, spot premiums ranged from 255 to 605 yuan/mt. In the spot market, the average price of cold-rolled 201/2B coils in Wuxi was unchanged; for cold-rolled raw edge 304/2B coils, the average price in Wuxi was flat, while in Foshan it held steady; cold-rolled 316L/2B coils in Wuxi were flat; hot-rolled 316L/NO.1 coils in Wuxi were offered unchanged; and cold-rolled 430/2B coils were unchanged in both Wuxi and Foshan.

This week, macro liquidity disturbances intensified, with stainless steel futures moving independently weaker and significantly decoupling from SHFE nickel and other nonferrous metals. During the week, fund sentiment switched repeatedly, leading to wild swings in SS futures, with the key support level at 14,500 yuan/mt broken earlier, the overall downward trend center continuing to shift lower, and market sentiment turning pessimistic. Spot and inventory side, the breakdown and weakening of futures continued to drag on the spot market, with off-season fundamentals releasing bearish factors in a concentrated manner. The market has now entered the traditional consumption off-season, where end-user demand is inherently weak, and the continued decline in futures further dampened market confidence, with wait-and-see sentiment dominating among end-users and purchase willingness remaining sluggish. This week, mainstream steel mills ended their earlier strategy of holding prices firm and proactively lowered spot guidance prices, leading to a pullback in spot prices. Transaction volumes showed a pattern of periodic pulse-like surges followed by rapid cooling, sustained firm demand was severely lacking, and overall trading returned to sluggishness. Against the background of weak end-user purchases and sluggish destocking, the pace of inventory buildup accelerated notably, social inventory continued to accumulate, further highlighting the pressure on spot fundamentals. Costs and profits side, finished steel and raw material prices declined in tandem this week, with steel mill smelting profits narrowing slightly but remaining positive. Affected by the pullback in spot prices and pressure on profits, mainstream steel mills lowered their raw material purchase expectations and released NPI purchase tenders at lower levels, driving down high-grade NPI prices, while stainless steel scrap purchase prices also pulled back, with the overall raw material cost center shifting lower. Steel mill profits were slightly compressed WoW, but the industry as a whole did not incur losses, and resilience in production profits remained. Overall, the stainless steel market this week presented a subdued pattern with futures breaking below key levels and moving lower, spot prices following suit and softening, inventory buildup accelerating, and profits narrowing slightly. Macro fund disturbances drove futures to weaken independently, while off-season weak rigid demand, the retreat of steel mills’ price support, and inventory accumulation were the core bearish factors for spot. In the short term, the weak market structure is hard to reverse, with futures continuing to consolidate on a subdued note and spot prices remaining under pressure.