Frequent News of Production Cuts at Stainless Steel Mills, Further Decline in Prices May Be Hindered [SMM Stainless Steel Daily Review]

SMM May 29 - Today, SS futures fluctuated, with the intraday low hitting the 12,600 yuan/mt mark before gradually rebounding, yet overall remained at low levels. The spot market continued its sluggish trend, with tepid transactions and lackluster upward momentum due to persistently weak end-use demand. Notably, multiple stainless steel mills recently announced maintenance and production cut plans. As these measures gradually take effect, the supply surplus is expected to ease. Meanwhile, current stainless steel prices have dropped to historical lows, with smelting costs exceeding selling prices, providing strong cost-side support. Against this backdrop, the room for further significant price declines appears limited.

Futures side, the most-traded contract 2507 traded range-bound. At 10:30 am, SS2507 stood at 12,710 yuan/mt, down 40 yuan/mt from the previous trading day. In Wuxi, 304/2B spot premiums/discounts ranged between 460-660 yuan/mt. In spot markets, cold-rolled 201/2B coils in Wuxi and Foshan both traded at 7,950 yuan/mt; cold-rolled 304/2B trimmed coils averaged 13,100 yuan/mt in both cities; cold-rolled 316L/2B coils in Wuxi and Foshan were priced at 24,050 yuan/mt; hot-rolled 316L/NO.1 coils traded at 23,350 yuan/mt in both locations; cold-rolled 430/2B coils in both cities were quoted at 7,500 yuan/mt.

Currently, the stainless steel market has entered the traditional consumption off-season, with markedly weak downstream demand. However, supply remains at high production levels, leaving steel mills with heavy sales pressure and traders grappling with inventory buildup, while social inventory continues to fluctuate at highs. Due to insufficient end-user orders, some futures-spot traders dumped spot cargoes at low prices after completing arbitrage, with some materials circulating only within trade channels without reaching end-users. Although rebounding high-grade NPI prices, historically low stainless steel prices, and cost-side losses provide some support, the combination of seasonal demand contraction and persistent high supply suggests downward pressure may persist in the short term if sales pressure continues.