[SMM Analysis] Peak Season Expectations Fall Short Amid Persistent Futures Weakness, End-User Demand Sluggish, Stainless Steel Inventory Sees Slight Buildup

SMM, September 10: This week, stainless steel social inventory shifted from the previous stable trend to a slight buildup, with the inventory midpoint edging higher. The pace of destocking during the peak season fell short of expectations. Total inventory in the two core markets of Wuxi and Foshan rose slightly, from 925,800 mt on September 3, 2026, to 926,200 mt in the latest period, up 0.04% WoW.

This week, expectations for a "September peak season" recovery in the stainless steel market completely failed to materialize, with persistently weak end-use demand becoming the core driver of the slight inventory buildup. During the week, SS futures extended their weak trend and hit bottom again, with the low point briefly touching 13,555 yuan/mt. The continued decline in futures amplified market pessimism, and the wait-and-see sentiment among downstream players and traders intensified significantly. The end-use market saw no concentrated stockpiling activity, with purchasing behavior continuing to contract. Overall inquiries and transactions in the market remained sluggish, with only rigid, buy-as-needed demand persisting, resulting in low destocking efficiency for cargoes. On the supply side, although steel mill production schedules pulled back in September, marginally easing industry supply pressure, the mismatch of persistently weak end-use demand and insufficient destocking capacity made it difficult to effectively absorb market supply. The inventory destocking process stalled, ultimately resulting in a slight buildup.

Overall, the continued breakdown in futures, the complete absence of front-loaded peak season demand, and persistently sluggish end-use transactions were the core reasons for the slight buildup in stainless steel inventory this week. The pullback in steel mill production schedules failed to effectively offset the inventory pressure from weak demand. At the current stage, the fundamental recovery of the stainless steel peak season has yet to materialize, with the pace of end-use demand recovery significantly below expectations and market trading sentiment remaining weak. In the short term, weak demand remains the core factor driving inventory trends. Against the backdrop of persistently lackluster rigid demand and unrelieved market pessimism, inventory is likely to maintain a mild buildup and a consolidating upward trajectory. Going forward, close attention should be paid to the pace of SS futures stabilization and recovery, the realization of end-use peak season rigid demand recovery, the magnitude of steel mill production schedule adjustments, and changes in the pace of inventory buildup.