Posted on 02 Apr 2026
Costs lifted China's stainless steel market during this year's first quarter, with the rises largely fueled by expectations of tightening nickel ore supplies from Indonesia, according to Mysteel analysis.
Besides tightening production quotas on nickel miners, the Indonesian government has approved new tariffs for coal and nickel exports, although discussions on specific tax rates are still ongoing, as Mysteel Global reported.
Under the combined influence of Indonesia's tighter nickel ore quotas and China's domestic pro-growth policies supporting consumer goods trade-ins, the price floor of stainless steel during January-March moved significantly higher compared with the fourth quarter of 2025.
However, the underlying tension between firm costs and weak demand persisted throughout the quarter, leading to rangebound trading after an initial price rally, the analysis notes.
On March 31, Mysteel assessed the spot price of 304/2B Hongwang 2*1240mm stainless cold-rolled coil (CRC) in East China's Wuxi – a key trading hub – at Yuan 14,400/t ($2,091/t) in-warehouse and including the 13% VAT, marking a significant gain of Yuan 1,250/t from last year's October-December quarter.
Looking ahead to the second quarter, China's stainless industry is set to face mounting challenges from the usual seasonal demand slowdown during summer, the analysis notes. Domestic stainless steel prices are expected to come under significant downward pressure, with the market likely to drift lower.
On the demand side, orders are expected to slow as the seasonal lull sets in, with most stainless buyers likely to purchase only as needed. If stainless mills sustain relatively high production schedules throughout the quarter, the supply-demand gap could widen, adding to the already elevated inventory levels, Mysteel points out.
Mysteel's survey of 89 warehouses across six major Chinese cities showed that as of the end of March, total austenitic stainless steel stocks had risen to around 1.16 million tonnes, up by 15.2% from end-December.
On the cost front, while raw materials continue to provide some support to prices, a key risk remains, according to the analysis. Specifically, if end-user demand stays sluggish in key consumption sectors such as real estate and exports, the market may struggle to justify finished product prices by pointing to rising costs.
Production costs for integrated stainless mills using outsourced high-grade nickel pig iron rose during January-March. The mills' daily average cost for producing 304-grade CRC stood at Yuan 15,235/t for the quarter, up by around Yuan 1,395/t from October-December, according to Mysteel's assessment.
In such a scenario, the high inventory build-up seen in recent months could trigger significant pushback among buyers, the analysis warns. Stainless steel mills, under pressure to manage cash flow issues and reduce stockpiles, would likely resort to price cuts to destock inventory, further weakening market sentiment.
Against this backdrop, stainless steel prices in China are expected to face clear downward pressure in this quarter, with the market likely to trend lower, the analysis concludes.
Source:Mysteel Global
