Cost support for stainless steel slightly strengthens amid boosted macro policy expectations
Recently, ferronickel prices have edged up, with the latest transaction price standing at 920-922 yuan per nickel unit (ex-ship with tax). The market is caught in a game between cost support and weak demand. On the cost side, the Indonesian nickel ore market has weakened, and the supply of nickel ore remains relatively loose, which has alleviated the cost pressure of ferronickel to a certain extent. However, ore prices are still at a high level. Indonesia's nickel ore price in August is expected to drop slightly by 1 US dollar, with limited decline and solid bottom support. On the supply side, some iron plants have reduced production load due to losses, but the oversupply pressure has not subsided. Quotations remain firm at 920-930 yuan per nickel unit (ex-ship with tax), and long-term orders are mainly at flat average prices. Steel mills are mostly in a wait-and-see attitude in raw material procurement. In addition, scrap stainless steel has been significantly substituted (with a premium of 35 yuan per nickel unit), making ferronickel far more economical than scrap stainless steel.
Image Source：699pic.com
In terms of ferrochrome, due to the rise in coal prices and the flat price of chrome ore futures, the cost of ferrochrome has stabilized at the bottom. In August, the procurement prices of TISCO and Tsingshan Steel were successively reduced by 100-200 yuan. Currently, ferrochrome prices are weakly stable. Affected by the declining procurement prices of ferrochrome steel mills in the future, spot prices still have room for a slight correction. However, short-term retail ferrochrome prices have changed little, and factories are mainly focused on delivering orders.
Stainless steel market fluctuates and rebounds under policy influence; wait-and-see sentiment intensifies in the future
After stainless steel futures prices hit a five-year low in late June, there were intensive calls for "anti-involution" and elimination of backward production capacity, leading to a fluctuating rebound in stainless steel futures prices, with the highest reaching 12,875 yuan/ton, an increase of more than 500 yuan/ton from the low point of this round of prices. Subsequently, it fluctuated and adjusted around 12,700 yuan. At the 6th Meeting of the Central Financial and Economic Commission on July 1, 2025, it was clearly proposed to regulate enterprises' low-price disorderly competition in accordance with laws and regulations and promote the orderly withdrawal of backward production capacity. Affected by the news of the Ministry of Industry and Information Technology's steady growth plan at the press conference of the State Council Information Office on July 18, the stimulus of "anti-involution" was further strengthened. Black commodities rebounded strongly this week. The combined force of policy and sentiment drove the market upward. The main stainless steel futures contract successfully broke through the strong resistance level at the 60-day moving average and the 13,000 yuan mark, with the intraday high reaching 13,130 yuan. However, it failed to stand firm, and the market fell rapidly. Long funds exited, while short funds took the opportunity to exert force, with the lowest touching 12,760 yuan/ton.
Behind this fluctuation, despite the support of anti-involution policies, the weak fundamentals of industrial supply and demand continue to exert pressure. In addition, the Shanghai Futures Exchange approved Hongwang Holdings Group Co., Ltd. as a stainless steel futures delivery warehouse. The new delivery rules have increased the potential warehouse receipt supply in the market, curbing the excessive premium of futures prices. The premium of near-month contracts has narrowed rapidly, limiting the upward space of futures prices.
As market sentiment cooled, stainless steel prices pulled back by 100-150 yuan/ton. Since current stainless steel prices are at a five-year low, and considering the cost of goods procurement, under the influence of off-season demand, agents and traders mostly adopt the operation of stabilizing prices to promote transactions. The recent price increase atmosphere has also driven downstream replenishment and speculative demand, accelerating the digestion of social inventory.
Stainless steel demand at home and abroad continues to be under pressure amid industry off-season
The demand side is in the off-season, and after the market rebound, wait-and-see sentiment has obviously intensified.
Demand in traditional downstream sectors: The pace of new real estate construction is slow. The current off-season demand has led to low load demand for stainless steel in fields such as construction hardware and decorative pipes, with procurement mainly driven by rigid demand. However, policy expectations (such as the steady growth plan of the Ministry of Industry and Information Technology) may boost future demand. From the perspective of the three major terminal white goods industries, according to the report of China IOL, the total production schedule of air conditioners, refrigerators, and washing machines in August 2025 is 26.97 million units, a decrease of 4.9% compared with the actual production in the same period last year.
Demand in emerging downstream sectors: Integrating the concept of low-carbon and environmental protection design, the extreme environment of the Yarlung Zangbo River Hydropower Project has driven the demand for high-end stainless steel. Photovoltaic brackets and Chengdu-Chongqing infrastructure construction have supported the demand for 316L stainless steel, but the increment cannot offset the overall weakness. Under the trend of lightweight new energy vehicles, the growth in the usage of stainless steel in battery brackets has been partially replaced by aluminum alloys. Automobile enterprises also have an expected decline in growth rate under the anti-involution atmosphere.
As multi-country agreement tariff policies are gradually implemented, overseas importers have completed replenishment, leading to a significant drop in orders, and some overseas regions are facing greater inventory pressure. In addition, the Central and Southeast Asian markets are constrained by geopolitical risks and logistics bottlenecks, which have impacted the stability of regional supply chains and caused the market to decline.
According to statistics from China Customs, domestic stainless steel export orders have been damaged due to U.S. tariffs and new European policies. Domestic stainless steel exports continued to decline in June, with a cumulative decrease of 80,700 tons from April to June this year, a drop of 17.14%. It is expected that stainless steel exports will remain at a low level in July.
Summary
Overall, macro policies have stimulated market sentiment in the short term, and cost support for stainless steel has slightly strengthened, but the market is still in a period of tug-of-war between "policy support and weak fundamentals". Although policies such as "anti-involution" have driven the rise of the main futures contract, and steel mills have raised listed prices accordingly, the reality of weak terminal demand remains unchanged. At this stage, the market is returning to supply and demand fundamentals, and futures and spot prices have declined. We need to view market changes rationally. For a trend reversal in prices, we still need to wait for clear signs of improvement on both supply and demand sides. In the medium and long term, we need to continue to pay attention to changes in U.S. tariff policies and whether terminal demand can be substantially improved.
