[SMM Stainless Steel Daily Review] SS Futures Weakened, Stainless Steel Spot Prices Held Steady

SMM April 20 reported that SS futures trended lower and pulled back. During the Friday night session, SS futures dropped sharply. Although a slight recovery followed, upward momentum was insufficient, and the overall pattern remained in the doldrums. As of the midday close, the most-traded SS contract was quoted at 14,960 yuan/mt. Spot market side, affected by the pullback in SS futures, a major stainless steel mill released a new round of guidance prices in the morning. Although prices were raised, the increase fell short of market expectations, and stainless steel traders mostly kept their quotes largely stable.

The most-traded SS futures contract pulled back. At 10:15 AM, SS2605 was quoted at 14,960 yuan/mt, down 135 yuan/mt from the previous trading day. Spot premiums for 304/2B in the Wuxi area ranged from 10-210 yuan/mt. In the spot market, the average price of cold-rolled 201/2B coils in Wuxi remained flat; for cold-rolled untrimmed 304/2B coils, the Wuxi average price rose and stabilized, while the Foshan average price rose by 50 yuan/mt; cold-rolled 316L/2B coils in the Wuxi area rose by 50 yuan/mt; hot-rolled 316L/NO.1 coils were quoted stable in Wuxi; cold-rolled 430/2B coils in both Wuxi and Foshan remained stable.

The stainless steel market is currently in the traditional peak season of "Golden March and Silver April." Driven by futures, spot quotes strengthened somewhat, but cautious wait-and-see sentiment among downstream end-users persisted, with concerns over short-term price fluctuations. Procurement showed no significant increase in volume, and transactions were mostly arbitrage purchases by trading firms engaging in both spot and futures market and cargo pick-up of earlier orders, with overall demand failing to fully match the price gains. Futures side, Indonesia officially revised the nickel ore Harga Patokan Mineral (HPM) calculation formula this week, and nickel ore prices are expected to rise notably, pushing up costs of related nickel-series products. Boosted by this positive development, both SHFE nickel and SS futures rose markedly, with SS futures once breaking through the year-to-date high, significantly lifting market sentiment. Supply and inventory side, stainless steel mill production schedules remained at relatively high levels, and supply pressure persisted. Thanks to increased market inquiries driven by futures and growing cargo pick-up of earlier orders, stainless steel social inventory further pulled back to 961,100 mt this week, down 1.8% WoW. Cost side, affected by the adjustment to Indonesia's nickel ore HPM, high-grade NPI prices stopped falling and turned upward. Stainless steel mills increased their NPI procurement volume, further reinforcing price support. The stainless steel scrap market showed a steady-to-rising trend, rising in tandem driven by its cost advantage over high-grade NPI and the strengthening of stainless steel finished product prices. Stainless steel production costs shifted upward, but the increase lagged behind that of finished product prices, and steel mill profits gradually recovered. Overall, the core market contradiction this week lay in the interplay between cost-expectation-driven price increases and insufficient real downstream demand amid high supply levels. Although the positive Indonesian nickel ore policy drove SS futures higher and provided cost-side support, the cautious stance of downstream end-users was hard to change. Combined with the unchanged high production schedule pattern at steel mills, stainless steel prices are expected to stabilize at highs in the short term, with further upside facing certain resistance.