[SMM Analysis] The periodic recovery in transactions is unsustainable, and stainless steel inventory ends its destocking trend with a slight rise.

SMM, June 4 – This week, stainless steel social inventory reversed its prior destocking trend, logging a slight buildup. Total inventory in the two core markets of Wuxi and Foshan edged higher, rising from 936,300 mt on May 28, 2026, to 940,400 mt on June 4, up 0.44% WoW. Inventory turned from destocking to accumulation.

This week, SS futures climbed in phases, driven by macro tailwinds. The short-term futures strength temporarily boosted market trading sentiment, fueling a phased recovery in spot sales. However, the upswing lacked sustainability; after futures pulled back, spot transactions quickly returned to mediocre levels. The market has now officially entered the traditional consumption off-season, with downstream end-use demand gradually weakening. Even as steel mills took the initiative to sell at thinner margins and speed up inventory turnover, end-users’ willingness to purchase saw no material improvement. Meanwhile, overall mill production schedules stayed high, and the support from raw material costs for spot prices continued to weaken. The oversupply pattern became more prominent. These combined factors drove inventory from decline to increase this week.

On the whole, weakening end-use demand during the off-season and elevated mill production schedules were the core reasons for the slight inventory buildup this week. A brief, pulse-like rally in futures that temporarily lifted spot sales was not enough to reverse the accumulation trend. Supply side, existing mill production plans lacked large-scale production cut measures so far. High production schedules are expected to persist in the short term, keeping market supply ample. Market participants are now more cautious in their trading sentiment, with industry confidence in the near-term outlook gradually declining and a wait-and-see approach prevailing. In the short term, against the backdrop of persistently weak off-season demand and mill production schedules that are unlikely to contract quickly, further stainless steel inventory buildup is expected. Going forward, focus needs to be on SS futures price fluctuations, actual downstream end-use purchase volumes, and the implementation pace of mill maintenance and production cuts.