Stainless steel prices have hit a new low in nearly five years, with weak transactions due to supply-demand imbalance remaining unchanged [SMM Stainless Steel Daily Review]

SMM News on June 19: Today, the SS futures market rose in tandem with the strength of SHFE nickel, maintaining an overall operation above 12,500 yuan/mt throughout the day. However, the spot market did not follow the upward trend of the futures market, with spot prices remaining weak. Stainless steel demand continued to slump, with traders generally reporting sluggish transactions and difficulties in destocking. This week, social inventory of stainless steel further accumulated, once again surpassing the 1 million mt mark. Currently, stainless steel prices have fallen to their lowest point in nearly five years, but the mainstream market view does not anticipate a stop in the decline and a rebound in the short term. Recently, prices of raw materials such as nickel and ferrochrome have continued to decline. Coupled with the still-high stainless steel inventory, it is expected that prices will remain in the doldrums in the short term.

In the futures market, the most-traded 2508 contract strengthened and rose. At 10:30 a.m., SS2508 was quoted at 12,555 yuan/mt, up 65 yuan/mt from the previous trading day. In the Wuxi region, spot premiums/discounts for 304/2B stainless steel ranged from 315-615 yuan/mt. In the spot market, cold-rolled 201/2B coils in both Wuxi and Foshan were quoted at 7,675 yuan/mt; cold-rolled trimmed 304/2B coils had an average price of 12,850 yuan/mt in Wuxi and the same in Foshan; cold-rolled 316L/2B coils were priced at 24,000 yuan/mt in Wuxi and the same in Foshan; hot-rolled 316L/NO.1 coils were quoted at 23,350 yuan/mt in both regions; cold-rolled 430/2B coils were priced at 7,500 yuan/mt in both Wuxi and Foshan.

Currently, the stainless steel market is in the traditional off-season for consumption, with downstream demand remaining sluggish. Despite enterprises generally facing losses, some steel mills have already begun to implement production cuts. However, due to the large production base in the early stage, current market supply remains at a historically high level for the same period, exacerbating the contradiction of oversupply. The shipping pressure on stainless steel mills, agents, and traders has surged, with both in-plant and social inventory remaining high. Market pessimism has spread widely, with traders scrambling to ship goods, leading to a continuous decline in stainless steel quotes. The raw material side is also under tremendous pressure. Affected by expectations for production cuts at steel mills, prices of raw materials such as high-grade NPI and high-carbon ferrochrome have also weakened simultaneously, further eroding the cost support for stainless steel. The market widely expects stainless steel mills to introduce further production cut plans to rectify the current supply-demand imbalance.