April Tariff Policy Disturbs Stainless Steel Mills' Inverted Margins, Steel Grade Differentiation Faces Pressure in May, Awaiting Changes [[SMM Data]]

According to SMM survey data, China's national stainless steel production reached 3.5123 million mt in April 2025, down slightly by 1.91% MoM and up by 10.4% YoY. Among this, the production of 200 series stainless steel was 944,500 mt, up by 3.11% MoM; the production of 300 series stainless steel was 1.8749 million mt, down by 4.19% MoM; and the production of 400 series stainless steel was 693,800 mt, down by 2.12% MoM. Following the conclusion of annual routine maintenance and the off-season for consumption in January-February, the stainless steel market entered the traditional peak season of "golden March and silver April," with March production exceeding 3.4 million mt, a record high. Despite a pullback in April production, it remained at a high level. However, in early April, the US significantly increased tariffs on Chinese goods, triggering severe market volatility. Stainless steel futures prices plummeted, with the spot market quickly following suit. Cost-profit margins for some categories severely inverted, leading to significant changes in the market landscape. In terms of the performance of different series, 300 series stainless steel was the most severely impacted. Although high-grade NPI prices also pulled back simultaneously, the decline was significantly less than that of 300 series stainless steel prices, exacerbating smelting losses. To cope with losses, multiple enterprises planned to reduce 300 series production and instead increase production of 200 series and 400 series products. In contrast, the price decline for 200 series stainless steel was relatively small, and the short-process technology using stainless steel scrap as a raw material still maintained profitability, driving production growth against the trend in April. Although 400 series stainless steel faced rising costs due to tight supply of high-carbon ferrochrome, some enterprises managed costs by leveraging their earlier low-cost raw material inventories, with downstream companies even planning to increase production.

Looking ahead to May, although stainless steel mills will adjust production volumes for different steel grades, overall production will remain at a relatively high level. With the conclusion of the traditional peak consumption season of "golden March and silver April," coupled with the ongoing impact of US tariff policies, wait-and-see sentiment in the market is intensifying, with downstream customers primarily purchasing to meet immediate needs. Driven by futures prices, stainless steel spot prices continue to operate at low levels. Among them, the issue of losses for 300 series stainless steel is particularly prominent, driving a clear trend for enterprises to switch to producing other steel grades. Although prices for high-grade NPI and high-carbon ferrochrome have already declined, the scope for further decreases is relatively limited, and their price declines are less than those of finished stainless steel products. Although stainless steel scrap has certain cost advantages, its supply scale is constrained, making it fundamentally unable to effectively alleviate the cost pressures faced by stainless steel enterprises. It is expected that in the future, as the pressures from losses and weak demand intensify further, stainless steel enterprises will further optimize their production strategies to better cope with the dual challenges of costs and demand.