[SMM Stainless Steel Daily Review] Pre-Season Warm-Up Falls Short of Expectations, Stainless Steel Spot and Futures Prices Weaken

According to SMM on August 21, SS futures further declined and pulled back, continuing the downward trend. Despite the relatively strong performance of SHFE nickel, SS still extended the prior pullback. By the close, the most-traded SS contract settled at 14,330 yuan/mt. In the spot market, dragged by the further decline in SS futures, although the traditional September-October peak season is approaching, downstream demand has not yet recovered. Market pessimism continued to ferment. Under the pressure of shipments, stainless steel spot prices further followed the decline.

SS most-traded futures contract. At 10:15, SS2610 was quoted at 14,205 yuan/mt, down 140 yuan/mt from the previous trading day. The spot premium for 304/2B in Wuxi ranged from 375 to 665 yuan/mt. In the spot market, the average price of cold-rolled 201/2B coil in Wuxi fell 50 yuan/mt; the average price of cold-rolled edge-trimmed 304/2B coil fell 50 yuan/mt in Wuxi and 50 yuan/mt in Foshan; the price of cold-rolled 316L/2B coil in Wuxi rose 100 yuan/mt; the quotation for hot-rolled 316L/NO.1 coil in Wuxi was flat; and cold-rolled 430/2B coil prices in both Wuxi and Foshan were flat.

This week, stainless steel futures overall consolidated at lows. Earlier, impacted by news of increased RKAB nickel ore quotas in Indonesia, SS futures slumped sharply, pulling the overall market valuation down to a relatively low range. This week, driven by the overall recovery in non-ferrous metals, futures experienced a phased rebound, but the prior bearish sentiment had not completely dissipated. The rebound was weak, and the market remained in a consolidation pattern at lows, with insufficient confidence recovery among bulls. The spot market followed futures in the doldrums, with the price center edging down. The peak season warm-up fell short of expectations, and the supply-demand loose pattern continued to stand out. Currently, the market is approaching the traditional September-October peak season, but end-user stockpiling in advance was sluggish, and downstream demand showed no substantial recovery. On-market transactions remained weak, dominated by just-in-need purchases and phased impulsive transactions, lacking sustained centralized restocking support. Affected by the low-level futures, market pessimism persisted. Combined with some easing in steel mills' willingness to hold prices firm, spot quotations followed the decline, and the market price center continued to move down. Supply-side pressure further increased. Steel mills' production schedule in August rose MoM, and industry capacity release accelerated. Under the mismatch pattern of persistently weak end-use demand, the pressure to destock market cargoes continued to amplify, driving social inventory of stainless steel to further increase this week, with inventory buildup continuing. The contradiction between loose supply and demand in the tail of the off-season stood out. The cost and profit side formed a bottom support, effectively limiting the deep decline in spot prices. This week, stainless steel finished product and raw material prices both pulled back, but the decline in finished product prices was notably larger than that in raw material prices. The price spread between finished products and raw materials continued to shrink, further compressing steel mills' smelting profits. The industry is now approaching the edge of losses. Cost support gradually strengthened, forming a hard floor for spot prices, limiting their downside room, and the market showed a weak but resilient characteristic. Overall, this week, the stainless steel market presented a game pattern of low-level weak repairs in futures, spot following futures weaker, weak season-preheating demand, supply growth raising inventory, and costs approaching losses supporting prices. In the short term, the lack of pre-season demand, the rebound of steel mill production schedules, and continuous inventory buildup constitute the core bearish factors, making it difficult to change the overall weak price operation; but the risk of cost losses emerges, bottom support continues to strengthen, limited deep decline room, and the market is likely to remain in the doldrums. Going forward, focus on tracking the sustainability of SS futures repair, the pace of downstream pre-season stockpiling, changes in steel mill production schedules, the change in raw material and product price spread, and the progress of inventory buildup.