[SMM Stainless Steel Daily Review] SS Futures Move Sideways, Spot Stainless Steel Quotations Edge Higher, Inquiries Improve

According to SMM’s July 22 report, SS futures moved sideways within a narrow range overall. Although the night session showed weakness, SS futures consolidated on a strong note after the morning open. As of the midday close, the most-traded SS contract settled at 14,825 yuan/mt. In the spot market, the strong SS futures consolidation pattern before noon lifted market confidence. Traders raised their offers for spot stainless steel, and market inquiry activity increased.

SS most-traded futures contract. At 10:15 a.m., SS2609 was reported at 14,795 yuan/mt, up 55 yuan/mt from the previous trading day. The spot premiums for 304/2B in Wuxi ranged from 225 to 625 yuan/mt. In the spot market, the average price of cold-rolled 201/2B coil in Wuxi rose by 50 yuan/mt. For cold-rolled unedged 304/2B coil, the average price increased by 50 yuan/mt in both Wuxi and Foshan. Cold-rolled 316L/2B coil prices remained flat in Wuxi. Hot-rolled 316L/NO.1 coil quotations held steady in Wuxi. Cold-rolled 430/2B coil prices remained unchanged in both Wuxi and Foshan.

This week, macro side, US CPI data declined and inflation expectations cooled, leading to a slight recovery in market risk appetite. Additionally, Indonesia’s Ministry of Energy and Mineral Resources clarified that the nickel ore production quota for this year would see only a modest limited increase. Limited growth room and persistent raw material ore supply tightness provided solid underlying support for the spot market, driving SHFE nickel and SS futures to stop falling and rebound. Spot prices and inventory side, steel mills holding prices firm, along with improvements in both transactions and arrivals, drove spot prices steadily higher, resulting in a clear inventory drawdown. This week, mainstream steel mills maintained firm restocking intentions, effectively steadying market trading sentiment. The market remained in the traditional consumption off-season, and overall terminal end-user rigid demand was weak. Downstream users showed insufficient acceptance of high-priced cargo after price hikes, keeping cautious wait-and-see sentiment in place. This limited the strength of spot price gains, with the increase clearly lagging futures. However, boosted by the futures rebound, the market sentiment of rushing to buy amid continuous price rise and holding back amid price downturn heated up. Terminal end-users’ periodic restocking demand was released, and the trading atmosphere improved markedly from the previous sluggish pattern. Meanwhile, typhoon weather this week disrupted logistics and transportation, leaving market spot arrivals insufficient and slowing the pace of cargo replenishment. The combination of recovering transactions and reduced arrivals effectively accelerated spot cargo destocking, causing stainless steel social inventory to pull back significantly this week. The off-season inventory buildup pressure that had been weighing on the market eased, and spot fundamentals improved marginally. Cost and profit side, this week, the price trends of finished steel products and raw materials diverged. Steel mill smelting profits recovered MoM, and the profitability environment continued to improve. During the week, mills maintained sustained pressure to push for lower raw material prices, and high-grade NPI procurement prices remained in the doldrums, steadily lowering the center of raw material costs. On the spot side, supported by mills holding prices firm and recovering transactions, finished steel product prices drifted higher. The price spread between finished steel products and raw materials continued to widen, directly driving a notable expansion in stainless steel smelting profit margins. The industry’s overall profit resilience further strengthened, and profitability pressure on the production side continued to ease. Overall, the stainless steel market this week exhibited a pattern of firm spot prices, inventory declines, and profit recovery. Tight expectations for nickel resources underpinned the industry bottom; steel mills held prices firm, solidifying the spot price center; off-season phased restocking and reduced logistics drove inventory destocking; and raw materials in the doldrums further expanded steel mills' profit margins. However, the core problems of weak off-season rigid demand and insufficient acceptance of high prices have not yet fundamentally improved, and spot prices lack the momentum for a sustained sharp rise.