[SMM Stainless Steel Daily Review] SS futures stopped falling and recovered, off-season shipment pressure suppressed the rise of stainless steel spot prices.

According to SMM on July 29, SS futures overall halted their decline and recovered. Driven by the decline in the US dollar index and gains in nonferrous metals futures, SS futures began a recovery as well. At the close, the most-traded SS futures contract settled at 14,515 yuan/mt. In the spot market, stainless steel spot quotations had already declined under the weight of weak futures on the previous afternoon; today, although SS futures recovered and rose, lifting enquiry activity in the spot market, traders' strong willingness to sell during the off-season limited the extent of the recovery in spot quotations.

SS futures most-traded contract. At 10:15 am, SS2609 was at 14,540 yuan/mt, unchanged from the previous trading day. Spot premiums for 304/2B in Wuxi were in the 380-830 yuan/mt range. In the spot market, Wuxi cold-rolled 201/2B coil average price was unchanged; for cold-rolled 304/2B coil (raw edge), Wuxi average price fell 25 yuan/mt, and Foshan average price fell 25 yuan/mt; Wuxi cold-rolled 316L/2B coil price was unchanged; hot-rolled 316L/NO.1 coil, Wuxi quotation unchanged; cold-rolled 430/2B coil in both Wuxi and Foshan was unchanged.

This week, macro and industrial positives resonated, supporting nickel and stainless steel futures to maintain a consolidating strong bias. Macro side, US inflation expectations fell, coupled with ongoing US-Iran geopolitical tensions that continued to disturb market risk sentiment. Industry side, earlier expectations of limited incremental supplementary quotas for Indonesian RKAB nickel ore continued to ferment, effectively stabilizing the bottom of nickel prices, driving SHFE nickel to consolidate on a strong note, and SS futures followed nickel prices to hold up well. Spot and inventory side, this week, SS futures consolidating on a strong note repaired market confidence, driving a concentrated release of spot transactions early in the week, with relatively stable absorption of low-priced cargo on rigid demand, ensuring basic transaction resilience. However, the market was still in the traditional off-season, with limited effective demand from downstream end-users, insufficient support from industrial rigid demand, and weak acceptance of high-priced cargo, resulting in a lack of upward momentum for spot prices. Price gains significantly lagged futures, and spot prices overall fluctuated within a range during the week, with limited magnitude of change. Inventory side, the logic significantly weakened, as the impact of the previous typhoon that restrained arrivals faded, previously stranded off-site cargoes concentrated at ports and entered warehouses, along with steel mills' continued normal allocations and ample market supply. Against the backdrop that end-use demand could not effectively absorb the incremental supply, social inventory of stainless steel built up slightly this week, and off-season inventory pressure emerged at the margin. Cost and profit side, the tug-of-war between longs and shorts in raw materials intensified this week, the price spread between finished steel and raw materials was basically stable, and overall smelting profits at mills were steady. During the week, stainless steel mills maintained their desire to bargain down raw material prices, adopted a cautious stance on raw material procurement, and overall raw material transactions were weak. Amid persistent steel mill pressure pushing for lower prices and weak just-in-time procurement, NPI prices remained stable overall, without significant fluctuations; stainless steel scrap edged higher following the stronger trend of finished product futures. This week, smelting profit margins at stainless steel mills remained largely stable, with no noticeable change in industry profitability. Overall, this week the stainless steel market presented a game landscape of macro supporting futures, the off-season capping spot, some inventory buildup, and profits running smoothly. Macro sentiment and expectations of tightening nickel supply supported futures to consolidate on a strong note, and futures recovered to improve market transactions, but weak just-in-time procurement in the off-season and insufficient acceptance of high prices consistently suppressed spot upside room. Improved weather brought concentrated arrivals, coupled with normal deliveries from steel mills, driving a slight inventory buildup. On the raw material side, the tug-of-war between longs and shorts was balanced, the price spread between finished products and raw materials remained stable, and steel mill profitability held steady. In the short term, the market is expected to continue the structural condition of strong futures and mildly fluctuating spot, with subsequent focus on tracking changes in macro sentiment, the trend of SHFE nickel futures, the release strength of downstream just-in-time procurement in the off-season, the pace of inventory buildup, and the raw material procurement tug-of-war.