In June, the supply-demand imbalance in the stainless steel market remained unresolved, with production declining. In July, weak consumption may lead to further production cuts [SMM analysis]

SMM survey data shows China's stainless steel production in June 2025 decreased 7.09% MoM while posting a marginal 0.1% YoY increase. By series, 200-series output fell 3.89% MoM, 300-series dropped 6.94% MoM, and 400-series declined 11.55% MoM.

June marked the official entry into the traditional consumption off-season for stainless steel. Although macro policy disturbances temporarily subsided during the month, market uncertainties remained significant. Despite consecutive production cuts by mills in recent months, current output still stands at historically high levels for the period, highlighting supply-demand imbalance. Moreover, stainless steel prices continued declining throughout the month, breaking multi-year lows. Influenced by the "rush to buy amid continuous price rise and hold back amid price downturn" mentality, end-users became increasingly cautious about raw material procurement, mainly making minimal purchases for urgent needs, resulting in persistently sluggish market transactions and further intensifying shipment pressure for mills and their agents. Steel mills faced severe losses, prompting more producers to plan production cuts.

By series, 200-series stainless steel maintained relatively stable monthly output, while 300-series and 400-series both saw significant declines. Having implemented substantial cuts earlier, 200-series mills slowed their reduction pace in June, though transactions remained weak with further price drops, suggesting additional cut plans ahead. Affected by futures market weakness, 300-series became dominated by low-priced supplies, with mills experiencing slow shipments, heavy inventory pressure, and severe smelting losses forcing production cuts. 400-series faced obvious sales stagnation following previous output increases, with persistent price declines and tight ferrochrome supply further aggravating mills' cost pressure.

Looking ahead to July, stainless steel production is expected to decline further. Despite prices hitting five-year lows, market confidence remains depressed with downstream players maintaining cautious pessimism. Mills, agents and traders all face tremendous shipment pressure amid persistent supply-demand imbalance. Overseas smelters' shutdowns reduced chromium raw material imports, keeping high-carbon ferrochrome prices firm. Although nickel raw material prices keep falling, they still fail to restore mills' profitability, leaving them trapped in losses. The supply-demand relationship shows no effective improvement yet, with mills suffering triple pressures from weak demand, high inventories and cost losses. Before the traditional off-season ends, downstream demand is unlikely to rebound significantly, making production cuts necessary to alleviate supply-demand contradictions. The specific pace and intensity of production cuts will become a key factor determining whether stainless steel prices can stabilize in July.