[SMM Analysis] Stainless Steel Social Inventory Exceeds One Million Again After Chinese New Year Holiday, Significant Inventory Buildup Does Not Alter Positive Expectations

SMM February 26, the total inventory of the two major stainless steel markets in Wuxi and Foshan showed a further inventory buildup trend this week, decreasing from 894,500 mt on February 12, 2026 to 1.0161 million mt on February 26, 2026, up 13.59% WoW.

Social inventory of stainless steel increased significantly this week. Currently, the Chinese New Year holiday has begun, with downstream end-users and stainless steel traders on holiday, leading to a complete suspension of market transactions; major public warehouses are mostly in a "inbound-only, no outbound" state, causing cargo flow to stall. Although road transport was largely suspended, and some steel mills entered maintenance shutdowns, resulting in a significant drop in monthly production, downstream demand completely halted. Meanwhile, state-owned steel mills maintained normal production, and large steel mills' rail transport remained unaffected, with continuous cargo arrivals at warehouses, directly driving a substantial accumulation in stainless steel social inventory this week. In terms of the nature of the inventory buildup, historical data show that stainless steel social inventory typically experiences a significant seasonal buildup during the Chinese New Year holiday, which is a normal market pattern; additionally, some cargo awaiting pick-up had not yet been warehoused, further boosting inventory growth. Combined with the recent continuous rise in stainless steel prices, market expectations for a strong recovery in the post-holiday "Golden March, Silver April" peak consumption season are high. Overall, the significant inventory buildup this week was mainly driven by the Chinese New Year holiday, logistics constraints, downstream shutdowns, and continued supply from some steel mills, rather than being caused by a fundamental supply-demand imbalance. Although short-term inventory exceeded one million metric tons and market transactions halted, supported by rising prices, the rationality of seasonal inventory buildup, and optimistic expectations for post-holiday consumption recovery, overall market confidence remained firm. The short-term substantial inventory accumulation did not significantly suppress the market's long-term positive trend.