Jiuyi (Nanjing) Spot Market

Cost–Demand Game: Concerns and Outlook for the Stainless Steel Market Amid High Volatility

Preface:

Recently, China’s domestic stainless steel market has trended upward driven by strong cost support, followed by a slight pullback. Amid a sharp tightening of Indonesia’s nickel ore policies and firm prices for nickel pig iron and high-carbon ferrochrome, both futures and spot prices of stainless steel rose in tandem, hitting a periodic high. However, real downstream demand has provided limited support, leading to weak trading at high price levels.

Strong Futures & Spot Prices with Increasing Short-Term Volatility

Since late April, stainless steel futures and spot prices have surged rapidly with growing volatility. In the futures market, the main SS contract hit a year-to-date high. After the Labor Day holiday, the market remained strong and further climbed to 15,835 CNY/ton, before retreating to 15,110 CNY/ton, showing a clear pattern of high-level oscillation.

The spot market rose sharply in sync, but downstream acceptance of high-priced resources remained low. Overall trading was quiet with strong wait-and-see sentiment, undermining the sustainability of the price rally. Spot prices also corrected. As of May 9, the base price of private 304 cold-rolled stainless steel in major markets such as Wuxi and Foshan was quoted at 10,505–15,100 CNY/ton.

Indonesian Policy Disturbances and Strong Cost Support

Indonesia’s Ministry of Energy and Mineral Resources (ESDM) plans to cut the 2026 nickel ore production quota (RKAB) by about 30% from previous expectations.

Meanwhile, a major local nickel ore producer announced a production suspension starting in mid-May. Growing concerns over tight nickel ore supply have directly pushed up procurement costs, and nickel pig iron prices surged accordingly. Every tightening move in Indonesia has quickly transmitted downstream through the industrial chain.

For high-carbon ferrochrome, steel mill tender prices were firm in May, with mainstream quotes stable at around 8,350–8,500 CNY/50 kg basis ton, further adding cost pressure on stainless steel. Supported by tight molybdenum concentrate supply, reluctance to sell at low prices, and rising international molybdenum prices, molybdenum iron is expected to stay firm in the short term, providing strong cost support for molybdenum-bearing stainless steel.

Ample Steel Mill Supply and Phased Inventory Rebound

On the supply side, estimated stainless steel output in May is 3.7422 million tons, remaining at a high level, with 300-series production up 12.68% year-on-year. Driven by high prices and decent profit margins, steel mills have accelerated resumption of production, gradually increasing supply pressure. With high production plans, inbound volumes are expected to stay elevated, which will cap price gains.

On the inventory side, as of May 7, total social inventory across 89 major warehouses nationwide stood at 1.1453 million tons, up 2.15% week-on-week. Although terminal buying improved slightly amid price-rise expectations, concentrated deliveries from steel mills plus thin trading during the Labor Day holiday led to a renewed rebound in social inventories. By product, 300-series stainless steel accounts for the largest share and is the main source of inventory pressure, while 200-series and 400-series inventories are relatively manageable.

High inventories contrast sharply with high prices. Strong cost support has boosted market confidence in holding up prices, yet inventory pressure limits upside potential. Intensified supply–demand game has kept prices in high-level oscillation.

Divergent Domestic Demand and Sustained Export Pressure

Domestic demand is divergent. As a traditional major consumer of stainless steel, the construction sector remains weak due to the ongoing property downturn, with insufficient orders and only rigid restocking rather than large-scale replenishment. Meanwhile, demand is robust in sectors including home appliance replacement, new energy power generation, and new energy vehicles.

Demand for 300-series and duplex stainless steel used in photovoltaic brackets and NEV battery casings has grown notably, while demand from high-end equipment manufacturing also maintains growth, becoming an important pillar of stainless steel consumption.

Export conditions remain under pressure. China’s stainless steel exports dropped significantly in Q1 2026. From January to March, total exports reached about 802,900 tons, down 423,100 tons or 34.5% year-on-year, indicating sharply weakened external support. The implementation of the export licensing system is a key factor behind the decline, alongside rising trade barriers, sluggish international demand, and higher shipping costs. Short-term export prospects are unlikely to improve, adding further domestic supply pressure.

Frequent Policy Signals Disturbing the Industrial Chain

Indonesian policies continue to disrupt the market. Beyond nickel ore quota cuts and revisions to HPM pricing rules, discussions are underway to impose export tariffs and windfall taxes on coal and nickel. If implemented, these policies will further raise the cost of nickel raw material exports, exacerbate global nickel supply tightness, and strengthen cost support for stainless steel.

In China, the adjustment of stainless steel futures thickness premium/discount on the Shanghai Futures Exchange (SHFE) will take effect on July 20, further improving trading rules and requiring close monitoring of market adaptation. Meanwhile, newly released national standards such as Implants for Surgery — Metallic Materials — Part 1: Wrought Stainless Steel will promote quality upgrading and high-end development, supporting the long-term high-quality growth of the industry.

Outlook：

In summary, short-term market disturbances from Indonesia’s nickel ore policies will continue, with strong cost support from nickel raw materials. Close attention should be paid to the implementation of export tariffs and windfall profit taxes.

In addition, concentrated arrivals from steel mills and inventory accumulation in May will be key factors. If inventories keep building while demand fails to absorb supply adequately, price upside will be constrained.

At present, the stainless steel market is in a game between strong cost support and relatively high supply versus weak demand. Short-term prices will remain resilient at high levels but with limited upside. Risks of correction at elevated prices should be closely monitored.

Overview

1. Price and Profit Performance

1.1 Seamless pipe prices edged up moderately in May

1.2 Theoretical profits of most pipe mills rose modestly in May

2. Pipe Billet Prices

3. Supply Situation

Output of seamless pipe mills declined month-on-month

4. Demand Situation

4.1 Trading volume decreased slightly month-on-month

4.2 Seamless pipe exports rose 0.57% year-on-year in April

5. Market Outlook for June

5.1 Positive factors

5.3 Price Forecast

Preface:

Strong Futures & Spot Prices with Increasing Short-Term Volatility

Indonesian Policy Disturbances and Strong Cost Support

Ample Steel Mill Supply and Phased Inventory Rebound

Divergent Domestic Demand and Sustained Export Pressure

Frequent Policy Signals Disturbing the Industrial Chain

Outlook：

I. Core Contradiction: Misalignment Between Rising Raw Material Costs and High Production Scheduling

II. Macro Linkage: Multiple Variables Worsen Market Uncertainty

Price Review

Raw Materials

Market Situation

Industry & Economic News