China Stainless Steel Market Under Pressure as August Output Plans Rise 11.26%
China’s stainless steel market remained under pressure last week as rising production and elevated inventories outweighed support from relatively firm raw material costs.
According to price monitoring by SunSirs, the average spot price of 304/2B stainless steel sheets stood at RMB 13,225 per tonne on August 21, down 0.38% from the beginning of the week. Despite the weekly decline, prices remained 8.4% higher than the same period last year. The latest movement reflects a market caught between cost support and weak downstream demand, with buyers continuing to adopt a cautious procurement approach.
Inventories Continue to Rise
Stainless steel inventories reached 1.11 million tonnes last week, increasing 0.4% from the previous week. Both cold-rolled and hot-rolled stainless steel stocks recorded increases. The build-up in inventories comes as domestic mills continue to maintain relatively high production schedules, adding further pressure to the market.
Major stainless steel producers have scheduled crude steel output of 3.6888 million tonnes for August, representing an increase of 3.11% month-on-month and 11.26% year-on-year. Production of 300-series stainless steel is expected to reach 1.9755 million tonnes, up 7.41% from July.
Cold-rolled stainless steel production scheduled for August stands at approximately 1.4401 million tonnes. While typhoon-related disruptions temporarily affected port unloading and logistics, SunSirs noted that these delays have not materially changed the overall supply situation.
Raw Material Trends Remain Mixed
Raw material movements have provided some support to stainless steel prices, although trends across key inputs remain mixed.
Nickel pig iron prices edged lower last week. The ex-factory price for 7%-10% grade nickel pig iron in Shandong was reported at RMB 1,140 per nickel unit, down RMB 10 from the previous week. The decline has resulted in a modest reduction in production costs for 304 stainless steel.
However, ferromolybdenum prices increased by RMB 5,000 per tonne, keeping costs elevated for molybdenum-bearing stainless steel grades. Ferrochrome prices, meanwhile, remained stable. Uncertainty surrounding Indonesia’s RKAB nickel ore quotas has also continued to generate volatility in the raw material market. Although nickel pig iron prices have softened, the decline has not been significant enough to remove broader cost support for stainless steel.
Downstream Demand Remains Sluggish
Demand continues to be the biggest constraint on the market.
The stainless steel industry remains in its traditional consumption off-season, with downstream buyers largely limiting purchases to immediate requirements and lower-priced restocking opportunities. The anticipated improvement ahead of the traditional “Golden September and Silver October” peak season has yet to materialise. End-users have shown little willingness to build inventories ahead of the expected seasonal recovery. Instead, transactions remain sporadic, with short-lived increases in trading activity failing to translate into sustained restocking.
Demand from real estate-related segments, including interior decoration materials and elevator components, remains weak. The home appliance sector is showing some resilience, but this remains limited to selected product categories rather than representing a broad-based recovery. Most processing companies continue to follow a hand-to-mouth procurement strategy and remain cautious about building inventories.
Market Outlook
The stainless steel market is approaching a critical transition point as the industry moves from the traditional off-season toward the expected peak consumption period.
However, high inventories and weak downstream demand are currently limiting the scope for a sustained price recovery. At the same time, raw material prices have not weakened significantly enough to remove the cost floor supporting stainless steel prices. SunSirs expects stainless steel prices to remain range-bound in the near term. Market participants will be watching three key factors: steel mills’ September production plans, the pace of inventory destocking, and whether downstream buyers begin meaningful stocking ahead of the September-October peak season.
For now, however, there is little evidence of a broad-based improvement in demand, keeping the stainless steel market under pressure.
