[SMM Analysis] Indonesian Nickel Ore Drives Futures Higher, Stainless Steel Inventory Continues Mild Destocking

SMM, April 16: Stainless steel social inventory continued to destock this week, with total inventory across the two core markets of Wuxi and Foshan edging down from 978,700 mt on April 9, 2026 to 961,100 mt on April 16, down 1.8% WoW, sustaining a gradual destocking pace.

This week, driven by news of Indonesia's nickel ore HMP adjustment, SS futures continued to probe higher and broke through the year-to-date high, significantly boosting market sentiment and in turn strengthening spot market confidence. Although downstream end-user clients still maintained a degree of cautious wait-and-see sentiment, the price rally widened traders' room for concessions, with some less desirable specifications continuing to be shipped at low prices. Meanwhile, the rapid rise in futures spurred increased arbitrage purchases by trading firms engaging in both spot and futures market. Combined with concentrated cargo pick-up of earlier low-priced orders, multiple factors jointly drove a pullback in stainless steel social inventory this week. Currently, steel mill profits have recovered to some extent, and April production schedules plan to remain at elevated levels, with sustained supply-side pressure posing significant challenges to further destocking. It should also be noted that cautious wait-and-see sentiment among downstream end-users has not fully dissipated, with a lack of willingness to actively stockpile, which to some extent constrained the magnitude of destocking, making substantial destocking difficult to achieve.

Overall, inventory further destocked this week, primarily driven by the combined effects of Indonesia's nickel ore policy boosting futures, traders offering concessions on shipments, increased arbitrage purchases, and cargo pick-up of earlier orders. The current high production schedule pace at steel mills has not changed significantly, and social inventory continues to face considerable destocking pressure against the backdrop of high supply. Although market sentiment has strengthened somewhat, cautious sentiment among downstream end-users is unlikely to change, and inventory is expected to maintain a gradual destocking or stabilizing trend in the near term.