[SMM Stainless Steel Daily Review] SS Futures Hit New Highs Again, Spot Stainless Steel Trading Cooled Off on the Eve of Labour Day Holiday

SMM April 28 reported that SS futures showed a strong upward momentum. Driven by the continued strength of SHFE nickel, SS futures rose further, breaking through the high since 2023 again, once reaching 15,670 yuan/mt. As of the midday close, the most-traded SS contract was quoted at 15,630 yuan/mt. Spot market side, as SS futures continued to break through new highs, stainless steel spot prices stayed high; although the Labour Day holiday was approaching, end-user downstream mostly maintained a cautious wait-and-see attitude, with overall transactions being sluggish.

The most-traded SS contract strengthened and probed higher. At 10:15 AM, SS2605 was quoted at 15,420 yuan/mt, up 45 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi were in the range of 0-200 yuan/mt. In the spot market, the average price of cold-rolled 201/2B coil in Wuxi rose 50 yuan/mt; for cold-rolled trimmed-edge 304/2B coil, the Wuxi average price fell 50 yuan/mt, and the Foshan average price fell 100 yuan/mt; cold-rolled 316L/2B coil in Wuxi held steady; hot-rolled 316L/NO.1 coil in Wuxi held steady; cold-rolled 430/2B coil in both Wuxi and Foshan held steady.

Currently, the stainless steel market saw spot prices hold up well driven by futures surging higher, but end-user downstream wait-and-see sentiment persisted, with actual transactions remaining weak overall and significantly influenced by futures changes, showing phased concentrated transaction characteristics, with overall demand not fully matching the price increase. Futures side, the stainless steel market this week showed a "first decline then rise" pattern. Early in the week, fundamentals had mediocre performance, and SS futures pulled back slightly from highs; subsequently, driven by news that a nickel mine in Indonesia would halt production in mid-May, tight supply expectations for nickel heated up, SS futures surged further, breaking through the high since 2023 again, significantly boosting market sentiment. Supply and inventory side, steel mills' allocation volumes remained low during the month, causing shortages in certain specifications in the market. Traders held low inventory levels with weak willingness to offer discounts, supporting spot prices to remain firm. Benefiting from increased market inquiries driven by stronger futures and phased transaction release, stainless steel social inventory further pulled back to 949,940 mt this week, down 1.22% WoW, with inventory pressure somewhat eased; however, as stainless steel mills still had moderate profitability, the high production schedule pattern was difficult to change in the short term, and supply-side pressure continued. Cost side, driven by Indonesian nickel mine news and stronger SHFE nickel futures, high-grade NPI prices continued to hold up well, but steel mills still had a certain desire to bargain down prices with low purchase volumes, which to some extent suppressed the magnitude of high-grade NPI price increases. Stainless steel scrap prices rose in tandem with stainless steel finished products during the week, pushing stainless steel production costs further up; as costs and finished product prices strengthened simultaneously, steel mill profit margins remained basically stable without significant fluctuations. Overall, although tightening Indonesian nickel ore policies drove SS futures higher, the cost side provided sustained support, and continued inventory pullback eased market pressure, downstream end-user cautious sentiment remained hard to change, actual transaction volume was weak, and with steel mills' high production schedule pattern unchanged, stainless steel prices were expected to stabilize at highs in the short term, with certain resistance to further upward movement.