[SMM Stainless Steel Daily Review] SS Pulls Back Sharply Amid News Disturbance; Stainless Steel Spot Weakens with Sluggish Trading

According to SMM on August 14, SS futures saw a sharp decline. The nonferrous metals sector was broadly weak in the night session, and SS futures, which had already retreated in line with the sector, fell sharply in tandem with SHFE nickel after morning news that Indonesian nickel ore quotas could be substantially increased disturbed sentiment. At the close, the most-traded SS contract settled at 14,120 yuan/mt. In the spot market, dragged by the retreat in SS futures and lower quotations from steel mill agents, stainless steel spot prices fell notably. The price decline further reinforced market pessimism, and trading remained subdued.

Most-traded SS futures contract. At 10:15 a.m., SS2610 was quoted at 14,245 yuan/mt, down 150 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi were in the 425-825 yuan/mt range. In the spot market, the Wuxi cold-rolled 201/2B coil average price held steady; for cold-rolled mill-edge 304/2B coil, the Wuxi average fell 100 yuan/mt and the Foshan average fell 150 yuan/mt; prices of cold-rolled 316L/2B coil in Wuxi fell 300 yuan/mt; quotes for hot-rolled 316L/NO.1 coil in Wuxi fell 350 yuan/mt; cold-rolled 430/2B coil in both Wuxi and Foshan was flat.

This week, stainless steel futures remained on a weak downward trajectory amid persistent macro sentiment disturbances. During the week, repeated news on Indonesia's RKAB nickel ore approvals continued to disrupt industry expectations. Combined with a hawkish US Fed policy stance and the unresolved US-Iran geopolitical conflict, macro uncertainty stayed elevated. Multiple bearish factors combined to drag SS futures lower through the week, with bearish sentiment dominating the market and the price center moving steadily lower. The spot market showed synchronized futures-spot weakness and weak supply-demand conditions, while inventory resilience stood out. Prices overall pulled back slightly, with limited downside room. The market remains in the traditional consumption off-season, and signs of recovery ahead of the September-October peak season have not yet emerged. Downstream end-users were cautious about purchasing, and transactions were mainly based on immediate needs, with no concentrated restocking. The sustainability of rigid demand was weak, making it difficult to provide upward support for spot prices. On the supply side, stainless steel mill production schedules rose steadily in August, and the pace of industry capacity release accelerated. With end-use demand not recovering in tandem, market supply-demand pressure increased marginally. However, during the week, Typhoon Dolphin directly affected east China, hindering transportation at key ports and on roads. The pace of shipments and arrivals was restricted, which temporarily offset pressure from supply growth. As a result, stainless steel social inventory remained broadly stable this week, with no significant inventory buildup. The reasonable inventory structure provided bottom support for spot prices. Cost and profit side, finished steel prices retreated along with futures this week, and steel mills' determination to hold prices firm weakened somewhat, pushing spot quotations slightly lower. However, raw material resilience was sufficient, effectively limiting the extent of price declines. During the week, NPI prices remained relatively firm, providing strong cost support for stainless steel production, while finished steel prices weakened and pulled back, narrowing the price spread between finished steel and raw materials and squeezing steel mills' smelting margins somewhat. Overall, cost-side support was notably rigid, effectively preventing spot prices from falling deeply. The market exhibited a pattern of "futures falling, spot prices weak, costs providing a floor, and limited declines." Overall, this week's stainless steel market presented a tug-of-war pattern: macro headwinds dragged on futures, off-season rigid demand was sluggish, supply growth added pressure, stable inventories provided a floor, and cost resilience limited declines. In the short term, the market's fundamentally weak character is clear. Steel mills gradually increasing production is further amplifying demand pressure on the market ahead, and prices face periodic pullback risks. However, reasonable inventory levels and firm raw material costs are forming a double floor, limiting downside room, and the market is expected to mainly consolidate at weak-stable levels. Going forward, key factors to track include changes in macro sentiment, the pace of SS futures fluctuations, the recovery progress of end-user rigid demand in the off-season, the implementation of steel mill production increases, and changes in inventory flows.