[SMM Stainless Steel Daily Review] SS futures weakened, and spot stainless steel trading was mediocre, awaiting peak season verification.

SS futures continued to consolidate on a subdued note, and, dragged by the broad-based decline in nonferrous metals, SS prices pulled back in tandem. As of the close, the most-traded SS contract settled at 14,260 yuan/mt. In the spot market, although SS futures pulled back, the overall decline was relatively small. Offers from stainless steel traders were mostly kept steady, with only occasional slight concessions. Overall transactions remained sluggish, showing no signs of recovery ahead of the September-October peak season.

SS Most-Traded Futures Contract. At 10:15 a.m., SS2610 was at 14,260 yuan/mt, up 25 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi ranged from 410 to 610 yuan/mt. In the spot market, average prices for Wuxi cold-rolled 201/2B coil were stable; for cold-rolled mill-edge 304/2B coil, Wuxi average was flat, Foshan average flat; Wuxi cold-rolled 316L/2B coil price fell 100 yuan/mt; hot-rolled 316L/NO.1 coil offers in Wuxi were unchanged; cold-rolled 430/2B coil prices in Wuxi and Foshan were flat.

This week, stainless steel futures remained in a subdued pullback trend overall, persistently disturbed by macro sentiment. During the week, news about Indonesia's RKAB nickel ore approvals repeatedly stirred 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 converged, dragging SS futures lower throughout the week. Bearish sentiment dominated the market, and the futures trading center steadily shifted downward. The spot market showed a pattern of weak futures-spot linkage and weak supply-demand yet notable inventory resilience, with prices pulling back overall. The market remains in the traditional consumption off-season, with no signs of recovery yet before the September-October peak season. End-user downstream purchasing sentiment was cautious, and market transactions were dominated by on-demand procurement without centralized restocking. The sustainability of rigid demand is weak, making it difficult to provide upward support for spot prices. Supply side, stainless steel mills' production schedules steadily rose in August, and the pace of industry capacity release accelerated. Against a background where end-use demand has not recovered in tandem, supply-demand pressure edged up marginally. However, during the week, Typhoon Baijuhai directly impacted east China, hindering transportation at core ports and land routes, restricting cargo shipments and arrivals. This partially offset the pressure from supply growth, keeping social inventory of stainless steel largely stable this week without significant inventory buildup. The reasonable inventory structure provided a bottom support for spot prices. Cost and profit side, this week finished steel prices pulled back with futures, and mills' efforts to hold prices firm eased somewhat, driving spot offers lower. However, raw material resilience was ample, effectively limiting the price decline. During the week, NPI prices remained relatively firm, providing strong support to stainless steel production costs. Meanwhile, the weak pullback in finished steel prices led to a narrowing of the price spread between finished steel and raw materials, and mills' smelting margins narrowed significantly. Overall, rigid support from the cost side effectively prevented a deep drop in spot prices, with the market exhibiting a pattern of "futures falling, spots weakening, costs providing a floor, and declines remaining limited." This week, the stainless steel market was shaped by a tug-of-war between macro headwinds dragging down futures, sluggish end-user demand during the off-season, supply growth adding pressure, stable inventory underpinning the market, and resilient costs resisting the decline. The short-term fundamentals were clearly weak, with steel mills gradually ramping up production, further amplifying demand pressure. Prices faced periodic pullback risks, but reasonable inventory levels and firm raw material costs formed a double bottom, limiting the downside room. The market was expected to predominantly consolidate at weak levels. Key factors to monitor going forward include changes in macro sentiment, fluctuations in SS futures, the pace of end-user demand recovery during the off-season, progress in steel mill production increases, and shifts in inventory flow.