[SMM Stainless Steel Daily Review] Macro pressure eases, SS most-traded contract bottoms out and rebounds; stainless steel spot market shipments under pressure, transactions sluggish

According to SMM on October 16, SS futures currently maintained a strong consolidation pattern. As macro headwinds gradually eased, futures completed a stop-falling recovery. During the night session, the low point briefly dipped to 13,120 yuan/mt, then consolidated higher and strengthened. By the close, the most-traded SS contract closed at 13,200 yuan/mt. In the spot market, dragged by persistently low futures, market pessimism had not yet dissipated, and the sluggish spot trading pattern was hard to change. Under shipment pressure, traders further lowered their quotes slightly.

The most-traded SS futures contract. At 10:15 a.m., SS2611 was quoted at 13,220 yuan/mt, flat from the previous trading day. Spot premiums for 304/2B in Wuxi were in the range of 700-1,050 yuan/mt. In the spot market, the average price of cold-rolled 201/2B coils in Wuxi was flat; for cold-rolled 304/2B coils with mill edge, the average price in Wuxi fell 75 yuan/mt, and the average price in Foshan fell 75 yuan/mt; the price of cold-rolled 316L/2B coils in Wuxi fell 200 yuan/mt; for hot-rolled 316L/NO.1 coils, the Wuxi quote fell 150 yuan/mt; cold-rolled 430/2B coils in both Wuxi and Foshan were flat.

This week, the stainless steel market remained in the doldrums. SHFE nickel and SS futures moved lower in tandem under the combined pressure of macro headwinds and weak fundamentals. The low point of SS futures briefly dipped to 13,800 yuan/mt, once again approaching the low levels seen at the beginning of the year, keeping market sentiment under sustained pressure.

From a macro perspective, US inflation pressure stayed high, and market expectations for further rate hikes by the US Fed continued to build. Global risk appetite weakened, and the nonferrous metals complex pulled back under collective pressure. SHFE nickel moved lower in tandem, exerting clear dual pressure on SS futures from both cost and sentiment. In the spot market, the traditional "September-October peak season" continued to disappoint, with demand recovery falling short of expectations. After the National Day holiday, downstream concentrated procurement and restocking demand was released in a phased, concentrated manner, driving the destocking of social inventory accumulated during the holiday. However, within the week, that portion of rigid demand had largely been released, and restocking momentum faded quickly. At the same time, persistently weakening prices further dented market confidence, and trading returned to sluggishness. End-users purchased as needed, with a strong wait-and-see sentiment prevailing. On the supply side, mainstream steel mills actively sold during the week. At the start of the week, mainstream steel mills lowered their guidance prices, dragging spot quotes lower in tandem. Traders showed a strong willingness to sell at discounts, and the overall market presented a pattern of "falling prices and shrinking volumes." From the cost and profit perspective, stainless steel prices and raw material costs pulled back in tandem. Weakening prices of raw materials such as nickel pig iron and ferrochrome continued to compress production costs. Although steel mill profit margins narrowed slightly from the earlier period, they still retained a certain profit cushion. With end-use demand persistently weak and finished steel prices lacking support, raw material concessions further opened room for cost collapse. Market expectations for the price floor shifted lower accordingly, and there remains room for prices to continue pulling back. Overall, the stainless steel market this week showed a weak pattern marked by intensifying macro pressure, futures hitting new lows, a short-lived post-holiday restock, falsified peak-season expectations, costs moving lower in tandem, and a continued supply-demand mismatch. In the short term, rising expectations of macro interest-rate hikes and sluggish end-use demand created dual pressure, while steel mills made production cuts but only to a limited extent, making it difficult to quickly reverse the supply-demand imbalance. The market currently lacks clear bottom signals, with no positive support from the macro front, cost side, or demand side, and restoring market confidence will take time. On balance, the main tone of weak stainless steel prices remains unchanged, and the market is likely to continue consolidating on a weak note and probing lower in the near term, with attention on the pace of steel mill production cut implementation and marginal changes in macro sentiment.