Stainless steel spot prices to face downside risk as incoming goods increase inventory pressure

Stainless steel spot prices traded in a narrow range last week. On December 28, the price of 304 mill bur edge cold-rolled stainless steel was at 13,800-14,000 yuan/mt, showing an average decrease of 50 yuan/mt compared to Dec 25. The stainless steel futures contract fluctuated in the range of 13,900 to 14,200 yuan/mt, with market quotes showing slight fluctuations. The market transaction sentiment slightly declined last week. Because of the upcoming New Year holiday, there was a temporary increase in demand for preparing inventory in downstream. However, with year-end fund recollection, some traders slightly lowered prices for quick sales. Overall, demand remains relatively weak. Stainless steel social inventories saw a weekly decrease of 3.62% and a monthly decrease of 8.08%. The pace of social inventory reduction slowed, with traders currently maintaining low inventory levels. On the news front, domestic steel mills have successively announced futures prices for March, remaining unchanged compared to current mainstream market transaction prices. Meanwhile, the implementation of price limits by steel mills boosted market sentiment. However, the short-term outlook for the stainless steel market is relatively weak, with a lack of positive news to stimulate a recovery in the near term. In general, the stainless steel spot market was mainly influenced by narrow fluctuations in the futures market, coupled with downstream demand for stocking up ahead of the New Year holiday. As goods gradually arrive in January, market inventory pressures increase. Spot prices are expected to face downward pressure, and stainless steel prices may remain low and fluctuate in the future.