Stainless steel futures market declines, warrant and inventory fall, but spot cargo transactions remain sluggish [SMM Analysis]

SMM reported on May 29 that during this week (May 23-29, 2025), the total inventory at the two major stainless steel markets in Wuxi and Foshan showed a slight destocking trend, declining from 973,900 mt on May 22, 2025, to 967,500 mt on May 29, down 0.66% WoW. The inventory pressure on stainless steel social inventory has eased somewhat but remains high.

This week, the stainless steel market has cooled significantly. The concentrated shipping activity driven by favourable macro front factors in the early stage has faded, coupled with the arrival of the traditional consumption off-season. Even as the Dragon Boat Festival holiday approaches, there are no signs of pre-holiday stockpiling in the market. Spot trading volumes among traders have remained sluggish, continuing the sluggish trend from last week. During the week, the stainless steel futures market saw a sharp decline, with prices approaching 12,600 yuan/mt, showing a significant discount to spot prices. This price spread prompted futures-to-spot traders to sell low-priced warrants for arbitrage, driving the inventory decline this week mainly concentrated in delivery warehouses and warrant inventory. Meanwhile, as some orders entered the settlement and cargo pick-up phase at month-end, this jointly contributed to a slight decrease in stainless steel social inventory. However, despite the inventory decline, it remains high overall. The core contradiction in the current market is still insufficient downstream demand. Although there have been continuous reports of production cuts at stainless steel mills recently, which have alleviated the supply surplus pressure to some extent, it will take time for supply and demand to rebalance. The actual production cuts also need further market verification, and the supply-demand pattern in the market is unlikely to improve significantly in the short term.

200-series: In Wuxi, the inventory of the 200-series increased from 93,400 mt to 95,700 mt, up 2.46%; in Foshan, it decreased from 164,800 mt to 162,700 mt, down 1.27%. 300-series: In Wuxi, the inventory of the 300-series decreased from 353,000 mt to 348,400 mt, down 1.3%; in Foshan, it decreased from 224,300 mt to 221,300 mt, down 1.29%. 400-series: In Wuxi, the inventory of the 400-series decreased from 82,100 mt to 82,600 mt, down 0.61%; in Foshan, it increased from 56,400 mt to 56,800 mt, up 0.71%.