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| Stainless Steel |
Market oversupply and low-season slump deepen pessimism across futures and spot trades
The stainless steel market took a sharp downward turn on June 10, after a major steel mill canceled its price limit, triggering a wave of aggressive selling across futures and spot markets. This comes amid weak downstream demand, high inventory levels, and the traditional off-season for consumption, further deepening market pessimism.
In the SS futures market, the most-traded SS2508 contract plummeted, dropping below the 12,500 yuan/mt threshold to close at 12,460 yuan/mt, a major psychological and technical setback. By 10:30 a.m., SS2508 was quoted at 12,545 yuan/mt, down 110 yuan/mt from the previous session.
The spot market was equally pressured, with low-priced goods becoming widespread. In Wuxi and Foshan, major stainless steel distribution hubs, spot prices were as follows:
- Cold-rolled 201/2B coils: ¥7,850/mt
- Cold-rolled trimmed 304/2B coils: ¥12,925/mt
- Cold-rolled 316L/2B coils: ¥24,050/mt
- Hot-rolled 316L/NO.1 coils: ¥23,350/mt
- Cold-rolled 430/2B coils: ¥7,500/mt
With stainless mills and agents under mounting selling pressure and the lifting of price limits, market pessimism spread quickly. Traders responded with sales promotions and price slashing, despite prices already nearing cyclical lows.
Even though some mills have begun cutting production, the oversupply remains severe due to earlier high output levels. The raw material side is also under pressure:
- High-grade NPI price gains have stalled amid reduced buying interest
- High-carbon ferrochrome continues its downward trend, weakening cost support
If planned production cuts fail to significantly reduce oversupply, stainless steel prices are unlikely to rebound in the short term, especially with the ongoing off-season demand weakness.
ScrapInsight Editorial Commentary
The cancellation of price limits signals that mills are prioritizing volume over margin to clear inventories. With bearish sentiment now dominant and raw material prices softening, traders are unlikely to find firm ground unless production cuts accelerate significantly. Expect more volatility until a floor in demand or output is found.
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