Stainless Steel Market Outlook: Softer Raw Materials, Tight Inventories Limit Downside Risk

September 21, 2026

The stainless steel market is currently being pulled in two directions. Raw material costs are weakening, while relatively low inventories continue to provide support to the spot market.

Nickel markets remain under pressure amid expectations of improving Indonesian ore supply. At the same time, softer purchasing levels for nickel pig iron and lower ferrochrome tender prices indicate that stainless steel production costs are gradually declining. In the near term, raw materials are therefore unlikely to provide strong upward momentum.

However, supply pressure remains manageable. Inventories of 300-series stainless steel in Wuxi and Foshan have continued to decline, while exchange warehouse stocks have also shown modest reductions. This comparatively lean inventory structure is helping stabilize spot prices despite weakness in the futures market.

The widening gap between futures and physical prices may create room for a technical recovery. Nevertheless, a sustained upward move will require stronger downstream demand and more active restocking.

DONG-YU Market View

We expect the stainless steel market to remain range-bound in the short term.

Lower input costs may limit the upside, while reduced inventories should help contain the downside. Pre-holiday restocking activity will be the key factor determining the market’s next direction.

For buyers, a phased purchasing strategy based on confirmed demand may be preferable to reacting solely to short-term futures movements.

DONG-YU Stainless Steel Enterprise Co., Ltd.

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