According to SMM on August 26, SS futures stopped falling and strengthened. The night session opened and once dipped to a recent low of 14,040 yuan/mt, then shot up rapidly on news of a nickel-iron smelting safety incident at an east China stainless steel mill. Although it pulled back in early morning trading, it recovered the previous trading day's losses. By close, the most-traded SS contract settled at 14,225 yuan/mt. On the spot market side, despite the recovery in SS futures, end-use demand for stainless steel spot cargo remained weak. Market inquiries and transactions were not active, with intraday trading mainly based on futures arbitrage. Spot prices were basically stable with limited fluctuations.
SS futures most-traded contract. At 10:15 AM, SS2610 was reported at 14,270 yuan/mt, up 125 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi were in the 400-600 yuan/mt range. In the spot market, the average price of cold-rolled 201/2B coil in Wuxi was flat; cold-rolled 304/2B coil (mill edge) average price in Wuxi rose 25 yuan/mt, while Foshan was flat; cold-rolled 316L/2B coil price in Wuxi was flat; hot-rolled 316L/NO.1 coil quotation in Wuxi was flat; cold-rolled 430/2B coil prices in both Wuxi and Foshan were flat.
Stainless steel futures overall consolidated at lows this week. Earlier, under the impact of news that Indonesia's RKAB nickel mine quota would increase, SS futures plunged sharply, and the overall market valuation fell to a low range. This week, driven by the general recovery in nonferrous metals, the futures saw a phased rebound, but the earlier bearish sentiment had not fully dissipated, and the rebound strength was weak, still in the pattern of consolidating at lows, with insufficient confidence recovery among bulls. The spot market tracked the futures and was in the doldrums, with the price center shifting slightly downward. Pre-season warm-up fell short of expectations, and the loose supply-demand pattern continued to stand out. The market is now approaching the traditional September-October peak season, but end-user stockpiling sentiment was sluggish, downstream demand has not substantially recovered, and on-site transactions remained weak, mainly consisting of just-in-time purchases and intermittent pulse transactions, lacking sustained concentrated restocking support. Affected by the low-level futures, market pessimism persisted. Coupled with steel mills' willingness to hold prices firm waning, spot quotes pulled back accordingly, and the market price center kept moving down. Supply-side pressure further increased, with August production schedules rising MoM, and the pace of industry capacity release accelerating. Against the backdrop of persistently weak end-use demand, the difficulty of destocking market supply continued to increase, pushing social inventory of stainless steel further higher this week, with the inventory buildup trend continuing. The contradiction of loose supply and demand in the tail of the off-season became prominent. The cost and profit side formed a bottom support, effectively limiting the downside risk of spot prices. This week, stainless steel finished product and raw material prices fell simultaneously, but the decline in finished product prices was significantly larger than that of raw material prices. The price spread between finished products and raw materials continued to shrink, and steel mills' smelting profits were further compressed, with the industry now approaching the edge of losses. Cost support is gradually strengthening, providing a hard floor for spot prices, limiting their downside room, and the market shows weakness with resilience. Overall, this week the stainless steel market has been characterized by a game pattern of low-level weak recovery in futures, spot prices weakening with futures, sluggish demand during the peak season warm-up, inventory buildup from rising supply growth, and cost support near losses underpinning prices. In the short term, the lack of pre-season stockpiling demand, rebound in steel mill production schedules, and continuous inventory buildup constitute the core bearish factors, making it difficult for prices to escape the doldrums. However, the risk of cost losses is emerging, with bottom support strengthening, limiting deep downside room, and the market is likely to remain in a consolidation pattern on a weak note. Subsequent focus will be on the sustainability of SS futures recovery, the pace of downstream pre-season stockpiling, changes in steel mill production schedules, shifts in the price spread between raw materials and finished products, and the progress of inventory buildup.
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