According to SMM on August 18, SS futures continued to consolidate on a strong note, extending yesterday’s strengthening trend and pushing prices higher. At the close, the most-traded SS futures contract settled at 14,275 yuan/mt. In the spot market, yesterday afternoon SS futures rebounded and strengthened; along with steady guidance prices from mainstream steel mills, spot market inquiries and transactions recovered noticeably. Today, further upward momentum was lacking, transactions softened somewhat, and traders’ offers remained firm.
SS Futures Most-Traded Contract. At 10:15 a.m., SS2610 was quoted at 14,235 yuan/mt, up 15 yuan/mt from the previous trading day. In Wuxi, 304/2B spot premiums were in the 435-635 yuan/mt range. In the spot market, the average price of Wuxi cold-rolled 201/2B coil was unchanged; for cold-rolled raw-edge 304/2B coil, the average price rose 25 yuan/mt in Wuxi and 25 yuan/mt in Foshan; cold-rolled 316L/2B coil prices in Wuxi fell 100 yuan/mt; hot-rolled 316L/NO.1 coil quotes in Wuxi were flat; and cold-rolled 430/2B coil was flat in both Wuxi and Foshan.
This week, stainless steel futures were repeatedly disrupted by macro sentiment and overall maintained a weak pullback trend. During the week, news about Indonesian RKAB nickel ore approvals repeatedly disrupted industry expectations; combined with the US Fed’s hawkish policy signals and the still-unresolved US-Iran geopolitical conflict, macro uncertainty stayed high. Multiple bearish factors combined to drag SS futures lower during the week, with bearish sentiment dominating the market overall and the operating center of SS futures steadily moving lower. The spot market showed weak futures-spot linkage and soft supply-demand conditions, but with notable inventory resilience; prices moved lower and pulled back overall. The market is still in the traditional consumption off-season, and signs of recovery before the September-October peak season have not yet appeared. Downstream end-users remain cautious in purchasing, and market transactions are dominated by hand-to-mouth procurement, with no concentrated restocking. The persistence of rigid demand is weak, making it difficult to provide upward support for spot prices. Supply side, stainless steel mills’ August production schedules have risen steadily, and the pace of industry capacity release has accelerated. Against a backdrop of no synchronized recovery in end-use demand, market supply-demand pressure is rising marginally. However, during the week Typhoon “Dolphin” directly affected east China, hindering transportation at core ports and overland logistics and constraining the pace of cargo shipments and arrivals, temporarily offsetting pressure from supply growth. This kept stainless steel social inventory broadly stable this week, with no significant inventory buildup, and the sound inventory structure provided bottom support for spot prices. Cost and profit side, finished steel prices pulled back with futures this week, and steel mills’ price-holding efforts loosened somewhat, driving spot offers lower. However, the raw material side remained sufficiently resilient, effectively limiting price declines. During the week, NPI prices were relatively firm, providing strong cost support for stainless steel production. Meanwhile, the weak pullback in finished steel prices narrowed the price spread between finished steel and raw materials, significantly squeezing steelmakers’ smelting margins. Overall, rigid support on the cost side became more pronounced, effectively preventing a deep drop in spot prices. The market showed operating characteristics of “futures down, spot weak; costs underpinning; limited declines.” Overall, this week the stainless steel market presented a tug-of-war pattern featuring macro headwinds dragging futures, weak rigid demand in the off-season, supply growth adding pressure, inventory holding steady to provide a floor, and cost resilience supporting prices against declines. In the short term, the market’s weak fundamentals were clear; steel mills’ gradual production increases further amplified demand pressure in the period ahead, and prices faced the risk of a phased pull back. However, reasonable inventory levels and firm raw material costs formed a dual underpinning, limiting downside room, and the overall market was mainly in the doldrums and consolidating. Going forward, key areas to monitor include changes in macro sentiment, the pace of SS futures fluctuations, the progress of off-season rigid end-user demand recovery, the implementation of steel mills’ production increases, and changes in inventory turnover.
