China: Stainless steel market weakens as futures slide, demand slows

• • Futures decline amid easing concerns over Indonesia’s NPI exports

• • 400-series prices fall as Tsingshan reduces ferro chrome buying price

China’s stainless steel market remained under pressure in early August as weaker nickel and stainless steel futures, coupled with sluggish seasonal demand, weighed on market sentiment. On the first trading day of the month, SHFE nickel futures fell below RMB 130,000/t ($19,250/t), while stainless steel futures slipped under RMB 14,500/t ($2,147/t), prompting traders in Foshan to withdraw premiums and align offers with futures-linked pricing.

The decline followed easing concerns over Indonesia’s mineral export inspection policy. Earlier expectations that stricter inspections could disrupt nickel pig iron (NPI) exports and tighten supply faded after policy implementation appeared less restrictive than anticipated, reducing the risk premium that had supported nickel prices.

Despite the softer market, downside in stainless steel prices is expected to remain limited. Market participants noted that Indonesia’s controlled nickel ore production quotas of 250-260 million tonnes (mnt) for 2026 are likely to keep nickel ore and NPI prices elevated, providing cost support to stainless steel producers. Private mill offers for 304 cold-rolled coils were assessed at around RMB 14,900-14,950/t ($2,206-2,213/t) in the domestic market.

Demand, however, remained subdued as prolonged heatwaves and heavy rainfall reduced activity at outdoor construction sites, while the home appliance sector entered its seasonal off-season. Market participants also warned that rising stainless steel production could lead to inventory accumulation, limiting any significant price recovery in the near term.

Meanwhile, the 400-series stainless steel market also softened after Tsingshan reduced its August ferro chrome procurement price by RMB 200/t, weakening cost support. Domestic 430 cold-rolled coil prices were assessed at RMB 7,280-7,300/t.

Outlook:

China’s stainless steel market is expected to remain range-bound in the near term. While firm nickel ore and NPI costs should support the market floor, weak seasonal demand, higher production, and the possibility of rising inventories are likely to cap any meaningful upside. Market participants will closely monitor Indonesian nickel supply policies, futures movements, and downstream demand recovery.

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