[SMM Stainless Steel Daily Review] SS futures continue to consolidate on a subdued note, spot stainless steel follows the decline with sluggish transactions

According to SMM’s August 11 report, SHFE nickel’s decline dragged SS futures further down, with prices falling in tandem. By the close, the most-traded SS contract settled at 14,525 yuan/mt. In the spot market, dragged by the successive losses in SS futures, spot traders also lowered their quotes in tandem. However, downstream cautious wait-and-see sentiment remained strong, coupled with the impact of typhoon weather, and market transactions stayed sluggish.

SS Futures Most-Traded Contract. At 10:15 am, SS2610 was at 14,520 yuan/mt, down 135 yuan/mt from the previous trading day. In Wuxi, spot premiums for 304/2B were in the range of 350-800 yuan/mt. In the spot market, the average price of cold-rolled 201/2B coil in Wuxi held steady; for cold-rolled trimmed edge 304/2B coil, the average price in Wuxi fell 50 yuan/mt, while in Foshan it fell 25 yuan/mt; cold-rolled 316L/2B coil prices in Wuxi were flat; for hot-rolled 316L/NO.1 coil, quotes in Wuxi were unchanged; cold-rolled 430/2B coil prices in both Wuxi and Foshan were flat.

This week, stainless steel futures were disrupted by both industry news and fund flows, showing a pattern of wild swings overall, with a fierce tug-of-war between longs and shorts. During the week, news about Indonesian RKAB nickel ore supplementary quotas repeatedly roiled market expectations, combined with shifts in fund flows in futures. SS futures rose initially but then fell back, briefly testing the 15,100 yuan/mt mark midweek. Subsequently, as expectations of nickel ore quota growth intensified, confidence among bulls evaporated, and futures again pulled back to a subdued trend. Overall fluctuations were large and trading sentiment kept switching. The spot market showed a pattern of weak futures-spot linkage and a basically balanced supply-demand, with prices generally moving sideways and finding it difficult to either rise or fall. The market remains in the traditional consumption off-season, and the persistent summer heat has continued to weigh on downstream processing and construction paces, making it hard for terminal rigid demand to be released, leaving overall market confidence insufficient. During the week, only when futures strengthened did spot transactions see a period of recovery, and after futures pulled back, downstream purchasing willingness quickly cooled. Market transactions weakened again, and the cautious wait-and-see sentiment at the end-user level kept intensifying. However, spot prices did not follow futures in weakening substantially, as there were ample core supporting factors: first, NPI, a nickel-based raw material, held firm, providing strong cost support for stainless steel production; second, mainstream steel mills were keen to hold prices firm, stabilizing the spot price center from the factory side; third, stainless steel social inventory is currently within a reasonable range, with destocking pressure relatively small and supply and demand remaining largely balanced. Overall, this week’s stainless steel market showed a bifurcated pattern where futures consolidated on a subdued note while spot prices held steady against declines. In the short term, weak off-season demand and sluggish terminal procurement are the core bearish factors limiting price increases. In addition, stainless steel production in August has already increased, gradually raising destocking pressure for market supply, leaving insufficient upward momentum for prices. But in the medium and long term, expectations for the upcoming peak season are gradually heating up, coupled with strong cost support and low inventory pressure, overall market expectations are positive, and the downside room for prices is also limited. Subsequently, the market is highly likely to move sideways, with a focus on tracking the progress of Indonesian nickel ore quota implementation, the pace of fluctuations in SS futures, the recovery of downstream rigid demand during the off-season, and steel mill production dynamics.