Interest Rate Cut Finally Materializes: What Lies Ahead for the Stainless Steel Market?
Since December 2025, the acero inoxidable market has exhibited a pattern of weak supply and demand, with prices rebounding slightly but facing overall pressure. On December 11, the Federal Reserve officially announced a 25-basis-point interest rate cut—its third consecutive cut, totaling 75 basis points. According to the dot plot, the Fed plans to cut rates only once in 2026. More notably, following this meeting, the Fed formally announced a balance sheet expansion, launching a moderate $40 billion bond-buying program in December. While the scale is relatively modest, it has released certain short-term liquidity. Overall, liquidity expectations have strengthened in December, but the direct impact on the stainless steel market remains limited, as the market is primarily driven by fundamentals.
Market Review
Stainless steel futures prices declined first and then rose in December, stabilizing and recovering by the end of the month. The closing price of the SHFE stainless steel main contract increased from 12,445 yuan/ton on December 1 to a peak of 12,555 yuan/ton on December 10, before adjusting slightly to 12,500 yuan/ton on December 11. The average monthly price stood at 12,485 yuan/ton, up approximately 1.5% from the November low. The spot market fluctuated in tandem: the gross base price of 304 cold-rolled stainless steel edged up steadily, with the private-sector gross base price in Wuxi reaching 12,650 yuan/ton (an increase of 50 yuan/ton), while Foshan’s market remained stable within the range of 12,500-12,600 yuan/ton—though high-priced resources faced sluggish transactions. Cost-side support persisted: ferronickel prices rebounded after hitting bottom, and the smelting cost of 304 cold-rolled acero inoxidable via the EAF (electric arc furnace) process remained around 12,188 yuan/ton, curbing downward price momentum.
Inventory Pressure Eases Modestly, but Absorption Pace Remains Slow
Social inventory has declined moderately from high levels, yet pressure persists. According to Mysteel data, stainless steel inventory among 78 national sample enterprises decreased from 1.032 million tons on December 5 to 1.0146 million tons on December 12, a 1.7% reduction, reflecting a slow destocking pace. Inventory performance diverged significantly between Foshan and Wuxi: Wuxi’s 300-series inventory rose slightly to 402,400 tons (a 1.2% week-on-week increase), while Foshan’s 300-series inventory fell to 176,300 tons (a 7.2% week-on-week decrease). End-user procurement was driven primarily by rigid demand. Futures warehouse receipt inventory continued to decline, dropping from 62,998 tons on December 1 to 61,378 tons on December 11 (a 2.6% decrease), with the destocking trend persisting but slowing down.
Production Cut Expectations on the Supply Side; Exports Reemerge as a Demand Focus
Weak demand dominates the market, with exports continuing to contract. Cumulative year-on-year growth in acero inoxidable exports was only 0.7% in October, while net exports fell by 9.71% year-on-year—primarily affected by overseas policy disruptions (such as U.S. tariffs) and reduced orders, leading to significant export declines to markets including Russia and Japan. Domestic end-users remained cautious in procurement, with transactions concentrated in low-priced bulk orders. Supply-side production cuts were limited: domestic crude steel production scheduling in December decreased slightly month-on-month, but global primary nickel output is projected to reach 3.826 million tons, leaving the supply surplus unchanged.
Conclusión
In December, the stainless steel market stabilized and rebounded supported by costs, but the pattern of weak supply and demand remains unchanged, with prices fluctuating at the bottom overall. Looking ahead to the year-end market, liquidity injections from the Federal Reserve may provide short-term support, but weak demand and oversupply remain core constraints. Prices are expected to trade within the range of 12,400-12,600 yuan/ton.