[SMM Analysis] Peak Season Expectations Completely Fall Through as End-User Demand Remains Weak, Stainless Steel Inventory Reverses Decline and Builds Up Again

SMM, October 1: This week, stainless steel social inventory ended the prior trend of continued destocking, halting its decline and shifting to inventory buildup overall. The inventory center rose again, and the seasonal destocking pace completely failed. Total inventory in the two core markets of Wuxi and Foshan moved higher, and industry inventory pressure became prominent once more.

This week, the expected recovery in the stainless steel market during the September-October peak season was thoroughly disproven. Persistent weakness in end-use demand and an increase in arrivals combined to push inventory from decline to growth. With the National Day holiday approaching during the week, downstream end-user pre-holiday stockpiling largely wound down. No new concentrated restocking demand emerged in the market, and end-users only made sporadic just-in-time procurement. Overall actual transaction volumes remained weak, and destocking efficiency fell sharply. Although SS futures showed firm performance this week and spot prices remained broadly stable, with futures sentiment providing some support to the market, this could not offset the absence of end-use demand. Additionally, arrivals increased this week, with supply-side cargo releases expanding steadily. Under the mismatch of weak demand and rising arrivals, the market returned to an inventory buildup path.

Overall, the complete failure of traditional peak-season demand, subdued end-user transactions before the holiday, and increased arrivals during the week were the core reasons stainless steel inventory halted its decline and built up this week. Firm futures and spot prices could not reverse the inventory accumulation pressure. At this stage, the fundamental recovery of stainless steel during the peak season has completely failed, the repair in end-use demand has fallen far short of expectations, and market trading sentiment remains persistently weak. In the short term, weak demand remains the core factor driving inventory trends. During the long holiday, end-user operations will stall and demand will remain absent, which may further amplify inventory buildup pressure. Going forward, focus on the pace of SS futures, the post-holiday realization of end-user just-in-time demand recovery, the pace of market arrivals, and changes in inventory buildup progress.