Stainless Steel Social Inventory Slightly Rose by 0.82% WoW, 300-Series Stainless Steel Ended Continuous Inventory Accumulation [SMM Analysis]

As of June 20, SMM social inventory of stainless steel was approximately 984,600 mt, up about 1.85% MoM and 0.82% WoW. Among them, social inventory of 200-series stainless steel was about 274,500 mt, up 0.41% WoW; social inventory of 300-series stainless steel was about 565,900 mt, down about 0.13% WoW; social inventory of 400-series stainless steel was about 144,100 mt, up about 0.92% WoW.

200-Series: Last week, the arrivals of 200-series stainless steel were relatively high, with #201 cold-rolled resources from Hongwang in Wuxi and Foshan accumulating in inventory but HRC experiencing destocking. Currently, entering the summer, the downstream operated at a low level, reducing the digestion for 200-series stainless steel. In South China, as both stainless steel and CRC production remained high, cold-rolled resources are expected to continue to be in surplus. Last week, CRC inventory in Wuxi increased by 1.71% WoW, while HRC inventory dropped by 0.9% WoW. In Foshan, CRC inventory increased by 0.62% WoW, while HRC stocks decreased by 2.24% WoW. The overall inventory held largely flat.

300-Series: Last week, 300-series stainless steel inventory saw declines for the first time since late May. In Wuxi, 300-series CRC inventory rose by 1.36% WoW, while 300-series HRC saw slightly tight supply, with inventory down 0.71% WoW amid normal digestion. In Foshan, both 300-series CRC and HRC inventories decreased last week, with HRC showing stronger digestion capacity and a significant decline in warrant inventory, leading to overall destocking of 1.04% WoW. In the first half of June, both 300-series stainless steel and CRC output maintained an upward trend. However, since mid-June, the demand and prices for 300-series stainless steel have continued to weaken. As stainless steel mills suffered losses, they intended to reduce 300-series stainless steel production. According to SMM, the inventory pressure in some stainless steel mills remained high, but the expected reduction in in-transit resources will alleviate it.

400-Series: Last week, the arrivals and shipments of 400-series stainless steel were normal. The inventory increased by 1.03% WoW in Wuxi, while in Foshan, HRC was relatively scarce and purchased as needed, leading to a slight inventory accumulation of 0.64% WoW.

In summary, stainless steel production increased in June, while downstream demand entered the off-season. As stainless steel mills transferred inventory pressure and urged pick-ups, social inventory continued to rise, although the accumulation has slowed down recently. From late June to July, to reduce losses, stainless steel mills may plan to cut production. It is expected that stainless steel will see a shrinking supply, entering a destocking cycle with slow digestion at high levels.