Stainless Steel Market Sluggish at End of Peak Season, but Warrant Inventory Decline Drives Social Inventory Pullback [SMM Analysis]

SMM News on May 22: This week (May 16-22, 2025), the total inventory at the two major stainless steel markets in Wuxi and Foshan showed a slight destocking trend, declining from 980,700 mt on May 15, 2025, to 973,900 mt on May 22, down 0.69% WoW. The inventory pressure on social inventory of stainless steel has eased somewhat but remains high.

This week, as macro policy disruptions gradually faded, the stainless steel market returned to a logic dominated by fundamental factors. With the traditional peak consumption season nearing its end, downstream procurement enthusiasm declined significantly, leading to persistently sluggish market transactions throughout the week and spreading pessimism. Faced with sales pressure, some traders had to adopt a strategy of offering discounts and promotions, which in turn drove a synchronous decline in both stainless steel spot and futures prices. From the perspective of inventory changes, despite sluggish transactions this week, market arrivals remained stable amid high stainless steel production. In Foshan, social inventory accumulated due to arrivals exceeding shipments. Meanwhile, some futures-to-physical traders completed cargo pick-up operations, leading to a significant reduction in warrant inventory during the week and driving a decline in social inventory in Wuxi. Looking ahead, as the month-end approaches, some agent traders will enter the stage of centralized settlement and cargo pick-up for May orders. However, with persistent weakness in downstream end-use consumption and limited overall decline in stainless steel production, mainly characterized by structural adjustments between series, it is expected that social inventory of stainless steel will still face significant accumulation pressure in the short term.

200-series: In Wuxi, 200-series inventory increased from 92,800 mt to 93,400 mt, up 0.65%; in Foshan, 200-series inventory decreased from 167,200 mt to 164,800 mt, down 1.67%. 300-series: In Wuxi, 300-series inventory decreased from 357,700 mt to 353,000 mt, down 1.31%; in Foshan, 300-series inventory increased from 221,100 mt to 224,300 mt, up 1.4%. 400-series: In Wuxi, 400-series inventory decreased from 86,300 mt to 82,100 mt, down 4.87%; in Foshan, 400-series inventory increased from 55,200 mt to 56,400 mt, up 2.17%.