[ SMM Analysis ] September-October Peak Season Falls Short: Hard to Rise, Hard to Fall – Stainless Steel Pre-Holiday Review and Post-Holiday Market Outlook

Before the holiday, the stainless steel market showed a consolidating pattern marked by external weakness and internal stability, a falsified peak season, and a balance between longs and shorts. Expectations for a traditional “September-October peak season” recovery completely failed to materialize, end-use demand remained persistently weak, and downstream stocking largely wound down ahead of the long holiday, leaving only sporadic rigid demand transactions. Overall trading was sluggish, and the demand side continued to weigh on spot prices. Futures moved independently and showed resilience, not following the deep declines in nonferrous metals and SHFE nickel, with strong support from low valuations, while spot prices remained firm overall.

The cost side continued to improve, with upstream nickel- and chromium-based raw material prices pulling back steadily. The price spread between finished products and raw materials repaired, reversing the earlier persistent losses, and steel mill production profits gradually recovered. On the supply side, expectations for production cuts continued to build, marginally tightening industry supply, which, combined with prices at yearly lows, effectively limited the downside. Inventories shifted from decline to increase, ending the earlier sustained destocking pace. Affected by sluggish end-user offtake and rising market arrivals, social inventory accumulated again, and supply pressure in the industry rebounded somewhat. Overall, weak demand and inventory buildup created bearish factors, while low valuations, production cuts providing a floor, and profit recovery offered support. The market saw a balanced tug-of-war between longs and shorts and continued to consolidate at lows.

After the holiday, the stainless steel market is likely to continue moving sideways within a range, with a weak supply-demand tug-of-war pattern, and the probability of a one-sided rise or fall is low. The demand side remains the core constraint. Expectations for a peak season recovery have been falsified, end-use demand is generally weak, and post-holiday production resumptions will proceed gradually, making a concentrated restocking-driven rally unlikely, with the pace of rigid demand release remaining slow.

The supply and cost sides will continue to provide bottom support. Steel mill production cuts are being implemented steadily, marginally easing supply pressure, while the decline in raw material prices slows down and steel mill profitability recovers. On the inventory front, the long holiday shutdown halted demand, and short-term inventory buildup pressure after the holiday will persist, continuing to cap the height of any rebound. Overall, after the holiday, stainless steel’s upside is constrained by demand and inventory, while its downside is supported by costs, production cuts, and low valuations, making it difficult for prices to rise or fall significantly. Going forward, the key factors to track are the pace of end-user restocking after work resumes, the implementation of steel mill production cuts, raw material price fluctuations, and the progress of inventory destocking.