Stainless Steel Rebound: Could Production Cuts Ease Supply-Demand Gaps?
Spot-Futures Divergence Persists, Spot Price Support Holds, Basis Gradually Recovers
Early in the week, driven by positive overseas macroeconomic news, market expectations for a Fed rate cut in December strengthened further, lifting sentiment across the commodity market moderately. In the copper sector, ongoing disruptions to mine supply intensified expectations of supply contraction, with a short squeeze in copper boosting sentiment across most non-ferrous metals. 不锈钢 followed the broader non-ferrous trend, staging a bottoming rebound. Market agents tentatively raised quotes for shipments, leading to robust intraday transactions. However, as futures prices surged and then pulled back, most spot traders opted to maintain prices while selling. Downstream enterprises generally shifted to a wait-and-see stance after centralized inventory replenishment, resulting in a sequential decline in overall market turnover. Against this backdrop, the basis trading model demonstrated a more pronounced price advantage over traditional spot sources amid sustained spot price resilience and volatile futures prices.
Steel Mill Inventories Pile Up, Probability of Subsequent Production Cuts Rises
In October, domestic steel mills generally adopted strategies to control shipment rhythms, significantly tightening market supply and causing shortages. Meanwhile, active procurement by downstream users accelerated inventory depletion, driving a continuous decline in social inventories. Entering November, with the end of the traditional peak demand season, steel mills gradually resumed and increased shipments, easing market shortages. Because of the arrival of the seasonal off-season, decreased demand remained sluggish, leaving the market in a state of oversupply and leading to consecutive weeks of inventory accumulation. This week’s slight inventory decline was mainly driven by the delivery of earlier low-cost futures orders rather than actual demand improvement, and the weak fundamentals still pose risks of further inventory buildup.
On the other hand, steel mill inventories have been accumulating since October. Mills also offered substantial discounts on approved quotas for contracted customers, and mills sluggish distribution to downstream channels has placed significant capital occupation and warehousing pressure on mills.
Oversupply Persists, Net Exports Gradually Decline
不锈钢 production has maintained an oscillatory upward trend overall. Although some enterprises implemented moderate production cuts earlier due to cost-price inversion, the scale of cuts was relatively limited and concentrated mainly in 200-series and 400-series products. Since 300-series stainless steel accounts for the largest share of total output and no clear production cut plans have been announced yet, market supply pressure remains unresolved.
On the demand side, domestic 不锈钢 consumption is in the traditional off-season, showing weakness. Meanwhile, affected by macro factors such as tightening economic policies and slowing growth in major overseas economies, export demand has also gradually weakened. Amid the persistent supply-demand imbalance, the market remains in a weak oversupplied state, which has suppressed the room for stainless steel price rebounds to a certain extent.
According to the latest Mysteel data, China’s preliminary 不锈钢 crude steel production plan for December is 3.2857 million tons, a 5.02% decrease from November. As the year-end approaches, many steel mills have arranged equipment maintenance, and some even plan to advance annual maintenance, which may constrain supply. If mainstream 300-series mills implement effective production cuts before the Spring Festival, it will help improve the current supply-demand structure. Combined with the potential release of inventory replenishment demand at the end of the year to cope with the holiday and the upcoming peak production season, stainless steel prices are expected to stage a moderate rebound in the subsequent period.