[SMM Stainless Steel Daily Review] Macro headwinds fully priced in, SS stops falling and strengthens; stainless steel spot cargo follows the rise, downstream acceptance of high prices remains limited

According to SMM on September 18, SS futures shot up further. After the US Fed's rate hike landed, nonferrous metals futures rebounded collectively, and SS stopped falling and strengthened in tandem. As of this afternoon's close, the most-traded SS contract settled at 13,700 yuan/mt. In the spot market, as SS futures strengthened, stainless steel spot offers followed the uptrend. Although inquiries and transactions recovered somewhat from the sluggish pattern seen earlier this week, downstream acceptance of high-priced cargoes remained limited. In addition, demand had already been largely released in the initial stage of the rebound after hitting bottom, so overall transactions remained stable.

SS futures most-traded contract. At 10:15 a.m., SS2611 was reported at 13,675 yuan/mt, up 120 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi were in the range of 595-795 yuan/mt. In the spot market, the average price of Wuxi cold-rolled 201/2B coils was flat; for cold-rolled 304/2B coils with mill edges, the average price in Wuxi rose 50 yuan/mt, while the average price in Foshan was flat; the price of cold-rolled 316L/2B coils in Wuxi was flat; for hot-rolled 316L/NO.1 coils, offers in Wuxi were flat; cold-rolled 430/2B coils in both Wuxi and Foshan were flat.

This week, the overall market was dominated by a weak atmosphere. The nonferrous metals sector collectively hit bottom, dragging SS futures down persistently, with prices once falling to a low of 13,290 yuan/mt during the session. As the US Fed's rate hike landed, previously accumulated macro headwinds were released in a concentrated manner and largely exhausted for the time being. Market pessimism eased marginally, and SS futures stopped falling and stabilized, seeing a modest recovery. The momentum for further deep declines in futures weakened significantly, and the market overall consolidated at lows. The spot market continued its weak tone of a disappointing peak season, with end-use demand recovery falling far short of expectations and market trading remaining persistently mediocre. The traditional "September peak season" has now been thoroughly disproven, with no recovery growth emerging from downstream end-users. In addition, market willingness to stockpile ahead of the Mid-Autumn Festival and National Day holidays remained low, and end-users generally maintained a hand-to-mouth purchasing model without concentrated restocking. Overall transactions in the market were sluggish, and market confidence remained weak. On the inventory side, a marginal improvement emerged, and supply-demand pressure eased somewhat. Steel mill production schedules for September are expected to pull back in tandem, marginally shrinking supply growth pressure in the industry. Combined with the continued decline in futures warrant inventory, spot transactions recovered slightly after futures stopped falling. Multiple factors together drove a modest destocking of stainless steel social inventory this week, and the loose supply-demand balance was slightly repaired. On the cost and profit side, conditions continued to recover, and steel mill losses gradually eased. Against the backdrop of an overall weak finished steel market and persistently soft demand, steel mills had a strong desire to bargain down raw material prices. During the week, prices of core raw materials such as NPI and stainless steel scrap accelerated downward, and the raw material cost center shifted down rapidly, effectively narrowing the price spread between finished steel and raw materials. This continued to repair the loss-making situation at stainless steel mills, and industry profit pressure was released in stages. But current cost support is generally weak, with raw material prices falling in tandem with finished steel, leaving bottom support fragile and unable to drive a trend reversal. Overall, this week's stainless steel market reflects a game of macro headwinds materializing, futures repairing at lows, peak-season demand being falsified, rigid demand remaining sluggish, inventory destocking slightly, and cost-driven losses being repaired. In the short term, the failure of traditional peak-season expectations and weak industry fundamentals remain the core constraints, compounded by lackluster cost support, making it difficult for stainless steel prices to break out of low-level consolidation. However, downside support is gradually emerging, with steel mill production schedules continuing to pull back, no significant social inventory buildup, macro headwinds fully priced in, insufficient momentum for further deep declines in futures, and spot prices already pulling back to yearly lows. Meanwhile, with the critical window for 2027 Indonesian nickel ore quota approvals approaching, market expectations are gradually repairing, leaving limited room for further deep price declines, and prices are likely to maintain weak consolidation at lows.