I. Macro & Raw Material Front: Geopolitical Conflicts Push Up Costs, Policy Releases Support Signals

The current stainless steel market stands in a complex landscape shaped by the dual interplay of overseas geopolitical conflicts and the domestic policy window period. The recent escalation of the Middle East situation, with the Strait of Hormuz serving as a critical chokepoint for global oil transportation, has directly pushed up international oil prices and shipping costs, significantly impacting stainless steel production costs-1. Energy price fluctuations not only raise smelting costs but also increase freight expenses for raw materials such as manganese ore and chrome ore, leading to significantly higher landed costs for imported ores.

Meanwhile, positive signals are emerging from domestic policy. The 2026 Government Work Report sets the economic growth target at 4.5%-5% and explicitly proposes using capacity regulation and standard-setting measures to deeply rectify "involutionary" competition. This policy direction provides expectation support for supply-side optimization in domestic manufacturing. Additionally, the 250 billion RMB consumer goods trade-in policy is expected to significantly boost demand in downstream sectors such as home appliances and kitchenware, which are core application areas for stainless steel.

Raw material prices remain strong, establishing a solid floor for stainless steel prices. Affected by tightened nickel ore quotas in Indonesia—with 2026 quotas sharply reduced to 260 million tons from 379 million tons in 2025—nickel pig iron (NPI) prices continue to climb. As of early March, high-grade NPI quotes rose to 1,088 RMB/nickel unit, and high-carbon ferrochrome prices were adjusted up to 8,600 RMB/50 mt. For chrome ore, arrivals from South Africa are expected to remain low, and geopolitical conflicts are pushing up ocean freight, providing strong cost support for ferrochrome.

II. Supply-Demand Fundamentals: Sharp Supply Recovery, High Inventory Caps Upside

On the supply side, affected by the Spring Festival holiday and concentrated mill maintenance in February, domestic stainless steel crude production fell to a yearly low of 2.65 million tons, down 23% month-on-month. However, entering March, mills are entering a concentrated production resumption phase, with crude production expected to surge by 1.037 million tons month-on-month to 3.687 million tons, setting a new historical record. By series, 300-series is expected to increase by 621,000 tons to 1.911 million tons, 200-series by 267,000 tons to 1.09 million tons, and 400-series by 149,000 tons to 686,000 tons.

Demand is showing a slow recovery. Downstream enterprises are gradually resuming operations post-holiday, but transactions remain primarily need-based, with the peak season fervor not yet apparent. Major infrastructure projects are accelerating resumption, leading demand for stainless steel pipes and sections. The home appliance and kitchenware sectors are benefiting from the "two new" policies, with trade-in demand gradually releasing. On the export front, shipment pace is recovering as the holiday impact fades, but volatility in overseas tariff policies continues to bring uncertainty.

Regarding inventories, social inventories show early signs of peaking but remain at high levels. As of early March, SMM data showed stainless steel social inventories at 1.0164 million tons, a marginal increase of just 3,000 tons from the previous week. Traders have not resorted to panic selling, keeping short-term inventory pressure within a controllable range, but the market will face inventory digestion challenges after supply surges in March.

III. Divergent Product Performance: 200-Series Shows Resilience, 316L Performs Strongly

Different stainless steel series show clear divergence:

200-Series: The Foshan market shows strong resilience, with limited downward price pressure under the combined effects of mill price stabilization, raw material support, and policy backing. The manganese-based industry chain is experiencing healthy destocking, with silicon manganese inventories digesting well and regional structural tightness providing price support. Domestic 200-series mills generally implemented production cuts in February, and with Qingshan's 201 cold-rolled and hot-rolled ex-works prices remaining flat, traders have relatively low willingness to adjust prices.

300-Series: 304 cold-rolled prices oscillate between cost support and high inventory pressure. Current full-cost estimates for 304 cold-rolled production are approximately 14,108 RMB/ton, while spot prices hover at 13,750-13,800 RMB/ton, putting mills in a loss position. The main futures contract SS2604 closed this week at 14,210 RMB/ton, up a slight 0.04% for the week.

316L: Driven by surging ferro-molybdenum prices, 316L shows the strongest performance, with hot-rolled prices breaking through 27,000 RMB/ton and cold-rolled base prices reaching 27,700 RMB/ton, gaining over 1,300 RMB/ton in just a few days.

IV. Market Outlook: Cost Support vs. Weak Reality, High-Level Oscillation Expected

In summary, the March stainless steel market will see the resonance of cost support and supply-demand dynamics. In the short term, firm NPI and ferrochrome prices establish a cost floor for stainless steel, with Indonesia's nickel ore policy tightening and geopolitical supply disruption expectations continuing to strengthen the cost support logic.

However, upside potential is constrained by high inventories and surging supply pressure. March mill production schedules are at record highs, while the strength of demand recovery remains to be verified, resulting in a weak supply-demand balance-9. Stainless steel prices are expected to maintain a high-level fluctuation pattern, with the main trading range for 304 cold-rolled likely between 13,500-14,500 RMB/ton. Whether prices can effectively break through will depend on the strength of demand release and the pace of inventory destocking in mid-to-late March.

Operationally, it is advisable to maintain a procurement-as-needed approach, closely monitoring raw material price changes and geopolitical developments, capturing fluctuation opportunities while remaining vigilant against gap movements triggered by unexpected news.