[SMM Stainless Steel Daily Review] SHFE nickel boost lifts SS futures, stainless steel spot price rise lags, low-priced cargo transactions moderate.

According to SMM on July 23, SS futures consolidated and strengthened. Driven by the rise of SHFE nickel, SS futures rallied simultaneously, with the most-traded SS contract closing at 14,855 yuan/mt. Spot market, the continuous rise in futures boosted market sentiment, but downstream end-users showed limited acceptance of high-priced cargoes, causing spot price gains to lag behind the futures; inquiries for low-priced resources in the market were moderate, and transactions concentrated in lower-tier materials.

The most-traded SS futures contract. At 10:15 a.m., SS2609 was quoted at 14,845 yuan/mt, up 50 yuan/mt from the previous trading day. In the spot market, the average price of Wuxi cold-rolled 201/2B coil rose 50 yuan/mt; cold-rolled mill edge 304/2B coil prices were flat in Wuxi and flat in Foshan; cold-rolled 316L/2B coil prices in Wuxi were flat; hot-rolled 316L/NO.1 coil prices in Wuxi were flat; cold-rolled 430/2B coil prices in both Wuxi and Foshan were flat.

This week, macro side, US CPI data pulled back, inflation expectations cooled, and market risk appetite recovered slightly. Coupled with Indonesia's Ministry of Energy and Mineral Resources confirming that only a moderate, small amount of additional nickel ore production quotas would be added for the year, limited growth space and a continued tight raw material supply landscape provided solid bottom support for the spot market, driving SHFE nickel and SS futures to stop falling and rebound. Spot and inventory side, steel mills' efforts to hold prices firm, along with a dual improvement in transactions and arrivals, caused spot prices to strengthen steadily, and inventories achieved a significant destocking. This week, mainstream steel mills showed firm determination to hold prices firm, effectively stabilizing market trading sentiment. The market remained in the traditional consumption off-season, with overall weak end-user just-in-time demand. Downstream users showed insufficient acceptance of high-priced cargoes after the price increases, and cautious wait-and-see sentiment persisted, limiting the strength of spot price gains, which significantly lagged the futures. However, driven by the futures rebound, the market's "rush to buy amid continuous price rise and hold back amid price downturn" mentality warmed up, releasing phased restocking demand from end-users, and the market trading atmosphere improved notably from the previously sluggish pattern. Meanwhile, typhoon weather this week disrupted logistics and transportation, leading to insufficient spot arrivals and a slowed pace of cargo replenishment in the market. The recovery in transactions combined with reduced arrivals effectively accelerated spot cargo destocking, pushing the social inventory of stainless steel to pull back significantly this week. The off-season inventory buildup pressure that had been weighing on the market was phasedly alleviated, and spot fundamentals improved marginally. Cost and profit side, this week the price trends of finished steel and raw materials diverged, with steel mill smelting profits achieving MoM recovery and the profitability environment continuing to improve. During the week, steel mills maintained pressure on raw material prices, with high-grade NPI procurement prices remaining in the doldrums, and the raw material cost center shifted steadily downward. Spot side, supported by mills' price-holding stance and transaction recovery, finished steel prices drifted higher. The sustained expansion of the price spread between finished steel and raw materials directly drove a notable increase in stainless steel smelting profit margins, further enhancing the industry's overall profit resilience, and continuously easing profit pressure on the production side. Overall, this week the stainless steel market showed a pattern of firm spots, falling inventory, and profit recovery. The tight nickel resource outlook underpinned the industry's bottom, mills' price-holding stance established the spot price center, phased off-season restocking and reduced logistics drove inventory destocking, and raw material weakness further expanded steel mill profit margins. However, the core issues of sluggish off-season just-in-time demand and insufficient acceptance of high prices have not fundamentally improved, and spot cargoes lacked sustained significant upward momentum.