The Fed cuts interest rates again, domestic policies are implemented, what's next for the stainless steel market?

Stainless steel futures prices traded weakly this week. The meeting between Chinese and US leaders, the release of the 15th Five-Year Plan recommendations, and the Fed's rate cut provided some emotional support to the market, but due to the current weak fundamentals, market confidence remains low.

Stainless steel futures prices dipped again this week, with trading volume remaining largely unchanged from last week, while open interest decreased significantly, indicating a growing wait-and-see attitude in the market. The traditional peak season of September and October has ended, and demand has not seen a significant boost. The strength of domestic macroeconomic policies needs to be closely monitored.

Stainless steel futures prices fell 0.82% this week.

1. Spot Market

Stainless steel spot prices fell by $5-$10 this week. On the macroeconomic front, the release of the 15th Five-Year Plan recommendations and the meeting between Chinese and US leaders provided some emotional support to the market, but the key focus remains on the implementation of these policies.

Regarding the fundamentals of stainless steel, although steel mills reduced production to some extent due to losses in the early stages, supply pressure in the stainless steel market remains. Post-holiday market demand is weak, and the expected recovery in the traditional peak season of September and October failed to materialize. October's production output increased significantly month-on-month, with continued arrivals in the market. Downstream demand is mainly driven by immediate needs, with low restocking intentions and limited absorption capacity. Social inventories have increased slightly. Spot market transactions were sluggish this week, with ample spot resources and traders engaging in low-price promotions.

On the macroeconomic policy front, although many favorable monetary policies have been introduced, the implementation of domestic fiscal policies has been slow, limiting their impact on the real economy. Raw material prices continue to decline, weakening cost support for steel mills. Production is showing slight profitability, potentially reducing the incentive for steel mills to reduce production. The export environment remains highly uncertain due to macroeconomic factors. The supply-demand imbalance in the stainless steel market persists.

In summary, raw material costs are weakening, steel mills are showing slight profitability, demand during the traditional peak season has not seen a significant boost, market risk appetite is declining against the backdrop of a macroeconomic downturn, demand is cautious, and the supply-demand imbalance remains. Looking ahead, close attention needs to be paid to steel mill production plans, raw material prices, and the progress of policy implementation.

2. Futures Market

This week, the Shanghai Futures Exchange's registered stainless steel warehouse receipts decreased by 538 tons to 73,657 tons compared to last week. Warehouse receipts have been declining recently; the pace of this decline needs to be monitored.

Warehouse receipts are putting significant pressure on market inventory; the market's absorption capacity needs to be maintained to sustain the pace of decline.

This week, stainless steel spot prices were weak. Raw material prices continued to fall, and steel mills achieved slight profits. Market demand was mainly driven by immediate needs and remained cautious. Spot market supply was ample, and social inventory remained high.

Looking ahead, attention should be paid to steel mill production plans, raw material prices, and the progress of policy implementation. The stainless steel market is expected to fluctuate in the near future.