- July stainless steel output rises 11% y-o-y
- 300 series output declines m-o-m despite growth
China’s stainless steel production increased to 3.6 mnt in July 2026, up 11% y-o-y from 3.2 mnt and 1.1% m-o-m from 3.5 mnt in June. Despite higher output, market sentiment remained subdued as weaker raw material prices, sluggish downstream demand and seasonal buying slowdown continued to weigh on stainless steel prices.
200 series records strongest monthly growth
Production of 200 series stainless steel rose sharply to 1.04 mnt, increasing 17% m-o-m from 0.89 mnt in June and 11% y-o-y, supported by improved mill operating rates.
Meanwhile, 300 series output declined 7% m-o-m to 1.83 mnt from 1.97 mnt in June as several mills moderated production amid weaker margins. However, production remained 8% higher y-o-y, reflecting continued capacity additions.
Production of 400 series stainless steel reached 0.70 mnt, up 4.5% m-o-m and 23% y-o-y from 0.57 mnt a year earlier, supported by higher ferritic stainless steel production.
Softer raw material prices reduce cost support
China’s stainless steel market remained under pressure as key raw material prices weakened during July. Major stainless steel producers lowered procurement prices for high-grade nickel pig iron (NPI) and high-carbon ferrochrome amid weaker stainless steel futures and cautious buying activity.
The bid price for high-grade NPI (minimum 11% nickel content) was reduced to around RMB 1,120($165) per nickel point for August deliveries, while the market index declined to approximately 1,140 yuan per nickel point by mid-July. At the same time, high-carbon ferrochrome prices eased to RMB 8,050-8,150/t ($1,192- (50% Cr basis) after major mills cut July purchase prices by around RMB 200/t.
Although Indonesia maintained a cautious stance on expanding nickel ore production quotas, the decline in NPI and ferrochrome prices weakened production cost support and limited upside for stainless steel prices.
Seasonal demand remains subdued
Demand continued to weaken during China’s traditional summer off-season. High temperatures and heavy rainfall disrupted construction activity, while the real estate, home appliances, kitchenware and metal processing sectors maintained cautious procurement, purchasing only on a need-based basis.
Although demand from new energy vehicles (NEVs) and solar-related industries remained relatively stable, it was insufficient to offset weakness in traditional construction and infrastructure sectors.
High production keeps supply pressure elevated
Despite a marginal decline in stainless steel inventories during July, the pace of destocking remained slow due to elevated production levels. Market participants noted that inventories could build again if mills continue operating at high utilisation rates without a corresponding recovery in downstream demand.
Outlook
China’s stainless steel market is expected to remain under pressure in the near term as weakening raw material costs, high production levels and seasonal demand weakness continue to weigh on prices. Market participants will closely monitor Indonesia’s nickel ore quota policy, Chinese mill production adjustments and downstream restocking ahead of the traditional demand recovery period in August and September. While tighter nickel ore availability may provide some support to raw material prices, a meaningful recovery in stainless steel prices is likely to depend on stronger end-user demand and improved inventory absorption.
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