[SMM Analysis] Futures Consolidating on a Strong Note Fail to Offset Weak Rigid Demand in the Off-Season, and Concentrated Arrivals Lead to a Minor Inventory Buildup of Stainless Steel.

SMM, July 23 – This week, stainless steel social inventories ended the previous destocking trend, overall stopped falling and rebounded with a slight inventory buildup, and off-season inventory pressure re-emerged. Total inventories in the two core markets of Wuxi and Foshan edged up, from 921,300 mt on July 9, 2026 to 929,900 mt on July 23, up 0.93% WoW, shifting from mild destocking previously to a phase of accumulation.

During the week, SS futures continued their previous consolidation on a strong note, market trading sentiment was somewhat restored, driving a recovery in spot inquiry activity early in the week and leading to a short-term recovery in intermittent transactions. However, off-season demand support was insufficient, and the sentiment boost from futures could only generate impulse-like market moves. After the release of intermittent transactions, the downstream procurement pace slowed rapidly, spot trades returned to mediocrity, and end-user purchasing sustainability was lacking. Changes on the supply circulation side were the key reason for this week’s inventory buildup. Shipments delayed earlier by typhoon and rainstorm weather arrived at ports and warehoused in a concentrated manner this week, coupled with steel mills maintaining their normal distribution pace, leading to a significant increase in spot supply volumes on the market and a phased rise in spot supply-side pressure. Against the backdrop of weak end-user procurement during the off-season and a slowdown in inventory digestion, the incremental arrivals from concentrated shipments could not be effectively absorbed by the market, ultimately driving a slight accumulation in social inventory. Overall, the off-season weakness in end-user rigid demand and insufficient transaction sustainability were the underlying bearish factors for the inventory buildup. The concentrated arrivals after the typhoon, combined with steel mills’ normal distribution and increased spot supply, were the direct trigger for this week’s inventory shift from decline to rise. The strength in futures could only temporarily repair market sentiment, but could not materially reverse the weak demand structure of the off-season, making it hard to sustain destocking of inventory. Currently, the off-season fundamentals of stainless steel still dominate the market. The recovery of real end-user demand remains sluggish, and a supply-demand surplus pattern has re-emerged. In the short term, barring a substantive recovery in end-user rigid demand, market inventory will most likely continue a pattern of narrow inventory buildup with a choppy upward trend. Going forward, close attention should be paid to the sustainability of sentiment in SS futures, changes in off-season rigid demand from the downstream, the pace of market arrivals, and the extent of inventory buildup.