[SMM Stainless Steel Daily Review] Nonferrous metals sector downturn drives stainless steel futures to hit bottom, spot stainless steel follows decline as market pessimism intensifies

According to SMM on September 11, dragged down by the collective decline in nonferrous metals, SS futures extended their downward move to hit bottom, with the low touching 13,555 yuan/mt. By the close, the most-traded SS contract settled at 13,580 yuan/mt. In the spot market, weighed down by the continued pullback in SS futures prices, stainless steel spot prices weakened in tandem. After successive price declines, bearish sentiment in the market continued to build, and the sluggish trading pattern persisted.

SS futures most-traded contract. At 10:15 a.m., SS2610 was quoted at 13,670 yuan/mt, down 190 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi were in the 550-900 yuan/mt range. In the spot market, the average price of Wuxi cold-rolled 201/2B coil was flat; for cold-rolled 304/2B coil with raw edges, the Wuxi average price fell 50 yuan/mt, and the Foshan average price fell 25 yuan/mt; Wuxi cold-rolled 316L/2B coil prices were flat; hot-rolled 316L/NO.1 coil quotes in Wuxi were flat; cold-rolled 430/2B coil prices in both Wuxi and Foshan were flat.

This week, stainless steel futures extended their low-level subdued consolidation trend overall. Disappointed peak-season expectations dominated futures sentiment, and bearish sentiment in the market continued to build. The end-user recovery has yet to materialize, and market expectations for a repair have completely fallen through. Pessimistic sentiment was released in a concentrated manner, dragging SS futures to keep hitting bottom. Prices briefly fell to 13,680 yuan/mt during the week, marking a new stage low since February this year. The trading center of futures continued to shift lower, with the overall pattern remaining weak. The spot market weakened in tandem with futures. With peak-season rigid demand absent, market trading sentiment remained persistently sluggish. Downstream end-users showed no concentrated stockpiling activity, maintaining a just-in-time purchasing pattern overall, and inventory destocking efficiency remained low. Weighed down by both the continued weakness in futures and demand falling short of expectations, stainless steel mills' resolve to hold prices firm continued to loosen, and market guidance prices and trader agent quotes were lowered successively. At the current stage, the market is primarily driven by traders actively selling to reduce inventory, with purchasing willingness generally weak. End-user buying remains cautious with a strong wait-and-see sentiment, and inquiries and transactions in the market remain persistently subdued. The spot market shows pronounced weakness. On the inventory side, the market maintained a stable inventory pattern under weak supply-demand conditions. Although steel mills have already lowered subsequent production schedules, marginally easing supply growth pressure, end-user rigid demand remains persistently soft, and the supply-demand mismatch persists. This week, stainless steel social inventory showed no notable fluctuations, remaining basically stable overall. On the cost and profit side, the market remained under pressure in a weak pattern, with steel mill losses showing no substantive improvement. This week, stainless steel product and raw material prices pulled back in tandem. The breakdown in product futures dragged spot prices lower, while raw material prices followed with adjustments. Although the decline in product prices this week was relatively contained and steel mills' earlier losses did not widen further, the industry's overall loss-making pattern has not been reversed. Production profitability pressure persists, and the cost side can only provide weak bottom support, making it difficult to drive a recovery in futures and spot prices. Overall, this week, the stainless steel market showed a weak game pattern with peak season expectations falling through, weak end-user rigid demand, futures breaking down at low levels, spot prices continuing to follow the decline, inventory running steadily, and losses under pressure. In the short term, the September peak season demand recovery falling short of expectations and spreading market pessimism remain the core bearish factors. The weak consolidation pattern in futures is hard to reverse, while the cost side provides slight support, limiting deep downside room.