Stainless steel hits a nearly five-month low amid rising inventories and weak demand
Stainless steel futures prices fell weakly this week. Entering the traditional off-season, demand for 不锈钢 continues to weaken while steel mills maintain high production schedules, leaving supply pressure intact for the later market.
Current market confidence is fragile, and fundamental contradictions may further accumulate. During the week, stainless steel futures continued to test new lows, with trading volume increasing slightly from last week and open interest rising significantly, indicating growing market divergence.
Against the backdrop of the traditional off-season, demand dynamics will hinge on the intensity of domestic macroeconomic policy rollouts. The main 不锈钢 futures contract closed at 12,380 this week, down 1.47% weekly, with an intra-week low of 12,355.
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Spot Market Performance
Spot 不锈钢 prices dropped by 50 yuan this week. Amid the traditional off-season, weakening downstream demand has reduced the market’s capacity to absorb supply, pushing prices lower. Traders are passively destocking, and steel mills face losses.
Market arrivals remain steady, while downstream purchases are limited to rigid demand with low restocking willingness and weak absorption capacity. Social inventories continue to rise sharply, leading to sluggish spot trading.
Ample spot resources are available, and cost-advantaged warehouse receipts have driven some restocking demand, with most transactions occurring at low price levels.
Macroeconomic Policies
Despite multiple favorable monetary policies, the slow implementation of domestic fiscal stimulus has limited impact on the real economy. Raw material prices remain under pressure, weakening cost support for steel mills that are now operating near the profit-loss threshold while maintaining high production.
Export conditions face significant uncertainty due to macroeconomic factors, and the supply-demand imbalance in the 不锈钢 market persists.
Summary of Key Factors
Weakened raw material cost support, steel mills at the profit-loss edge, the traditional off-season, sluggish downstream demand, muted market risk appetite, and cautious purchasing have all exacerbated the supply-demand imbalance.
Future market trends will depend on steel mill production plans, raw material prices, and the progress of policy implementation.
Futures Market Dynamics
Registered warehouse receipts for stainless steel on the Shanghai Futures Exchange decreased by 1,726 tons week-on-week to 70,365 tons. Despite sharp futures price declines this week, warehouse receipt holders maintain a competitive edge.
Recent continuous destocking of warehouse receipts calls for attention to whether the pace can be sustained. Warehouse receipts remain a major pressure on market inventories, requiring sustained absorption capacity to maintain the destocking rate.
Overall Outlook
Spot 不锈钢 prices will likely fluctuate weakly in the near term. Raw material pressure, steel mills’ profit-loss dilemma, rigid-demand-driven and cautious purchasing, ample spot supplies, and high social inventories will persist.
Key focuses include steel mill production schedules, raw material prices, and policy implementation progress.
