[SMM Stainless Steel Daily Review] SS Futures Fluctuated Upward, While Spot Stainless Steel Trading Was Sluggish as the Qingming Festival Approached

SMM News, April 3: SS futures held up well. SHFE nickel drove SS futures to stop falling and strengthen, closing at 14,235 yuan/mt as of the midday close. In the spot market, although SS futures stopped falling and rebounded, the overall gains were limited and failed to provide a clear boost to the spot market. Coupled with the approaching Qingming Festival, overall market trading was sluggish, and traders mainly kept quotes largely stable.

The most-traded SS futures contract stopped falling and strengthened. At 10:15 a.m., SS2605 was quoted at 14,150 yuan/mt, up 40 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi stood in the 270-470 yuan/mt range. In the spot market, the average price of cold-rolled 201/2B coils in Wuxi was unchanged; for cold-rolled trim-edge 304/2B coils, the average price in Wuxi was unchanged and the average price in Foshan was largely stable; cold-rolled 316L/2B coils in Wuxi were unchanged; for hot-rolled 316L/NO.1 coils, Wuxi quotes were unchanged; and cold-rolled 430/2B coils in both Wuxi and Foshan were largely stable.

The stainless steel market is currently in the traditional peak consumption season of "Golden March and Silver April," and the fundamental downstream demand base has recovered somewhat from the previous period. End-user procurement has continued at a pace driven by rigid demand, and overall trading volume has been sufficient to support the market's basic vitality. However, affected by macro news disruptions and fluctuations in futures, downstream end-user clients have still maintained a wait-and-see sentiment, showing no willingness to stockpile, while transactions have fluctuated with changes in the news flow. On the futures side, the geopolitical conflict involving Iran has been difficult to resolve in the short term, and uncertainty from macro news has remained a significant disturbance. This week, SS futures continued to move sideways within a range, never forming a clear breakout direction and thus struggling to effectively drive the spot market. On the supply and inventory side, stainless steel mills' April production schedules have remained at a relatively high level, and the high-supply pattern has not changed, bringing certain digestion pressure to the market. In addition, with steel mills concentrating shipments to the market at month-end, although downstream demand has continued to be supported by rigid demand, stainless steel social inventory increased this week, but only by a limited margin. At present, steel mills have mainly focused on shipping at stable prices to ease inventory and supply pressure. Cost side, nickel ore prices remained firm, leaving limited room to compress ferronickel prices. However, stainless steel mills have already been on the verge of losses, with low acceptance of high-priced raw materials. Back-and-forth negotiations between upstream and downstream have continued, keeping stainless steel production costs relatively stable. Earlier market expectations that cost support would underpin stainless steel prices have now gradually faded. Overall, the core contradiction in the stainless steel market this week has been the mismatch between high supply and demand that was stable but cautious. Although the peak season of "Golden March and Silver April" has supported the downstream demand base, and the cost side has also limited the downside room for stainless steel prices to some extent, strong downstream wait-and-see sentiment, transactions significantly disturbed by news flow, and persistent uncertainty in macro news have remained in place. On balance, whether stainless steel prices can strengthen and move higher in the future market will still depend on further support from macro news.