News of Production Cuts at Stainless Steel Mills: Are Prices Expected to Bottom Out? [SMM Stainless Steel Daily Review]

SMM News on June 24, SS futures market opened lower and hit bottom, refreshing a new five-year low again. However, influenced by news of production cuts at major domestic stainless steel mills in the afternoon, the market bottomed out and rebounded. In the spot market, Tsingshan once again lowered the plate prices for 300-series stainless steel in the morning, with a decrease of 200-300 yuan/mt, leading to a further decline in spot prices in the market. The base price of 304 cold-rolled trimmed steel coils had dropped to 12,100 yuan/mt, returning to the price level seen in early 2020. The continuous decline in prices further intensified the wait-and-see sentiment among downstream buyers, and transactions did not recover despite the price pullback. At noon, news spread about production cuts at major domestic stainless steel mills, boosting market sentiment and leading to a simultaneous rebound in futures and spot prices.

In the futures market, the most-traded 2508 contract bottomed out and rebounded. At 10:30 a.m., SS2508 was reported at 12,340 yuan/mt, down 165 yuan/mt from the previous trading day. Spot premiums and discounts for 304/2B in the Wuxi area ranged from 280-530 yuan/mt. In the spot market, cold-rolled 201/2B coils in both Wuxi and Foshan were reported at 7,575 yuan/mt; cold-rolled trimmed 304/2B coils had an average price of 12,575 yuan/mt in Wuxi and the same in Foshan; cold-rolled 316L/2B coils were priced at 23,700 yuan/mt in Wuxi and the same in Foshan; hot-rolled 316L/NO.1 coils were reported at 23,000 yuan/mt in both regions; cold-rolled 430/2B coils were priced at 7,350 yuan/mt in both Wuxi and Foshan

. Currently, the stainless steel market is in the traditional off-season for consumption, with persistent weakness in downstream demand. Despite widespread losses faced by enterprises, 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, and the contradiction of oversupply is particularly prominent. The pressure on stainless steel mills, agents, and traders to sell has risen sharply. Both in-plant inventory and social inventory remain high, and market pessimism is widespread. Traders are scrambling to sell, leading to a continuous decline in stainless steel quotes. The raw material side is also under tremendous pressure. Influenced by expectations for production cuts at steel mills, prices of raw materials such as high-grade NPI and stainless steel scrap have also weakened simultaneously, further eroding the cost support for stainless steel. The market is waiting to see how the supply-demand relationship will recover after production cuts at stainless steel mills.