Overview of Stainless Steel Market in the First Half of the Year

Decline in Both Costs and Profits, Negative Profit Margins Across All Series
In the first half of the year, the average costs for all series decreased year-on-year. Among them, the cost of 304 series dropped by 2.21% to RMB 13,295 per ton, the cost of 201 series fell by 8.1% to RMB 8,336 per ton, and the cost of 430 series declined by 8.18% to RMB 7,556 per ton. The year-on-year cost reductions for the 201 and 430 series were the most significant, both exceeding 8%.

In terms of profits, as the decline in finished product prices outpaced the drop in raw material prices, the production profit margins for all series were negative in the first half of the year. The average profit margin for the 201 series was -4.58%, compared to 0.5% in the same period of 2024. The average profit margin for the 304 series was -1.19%, down from 2.4% in the same period of 2024. This indicates that both the 201 and 304 series shifted from profitability to losses. Meanwhile, the profit margin for the 430 series was -5.14%, compared to -3.44% in the same period of 2024, reflecting a further expansion of losses.

Year-on-Year Increase in Production and Inventory, Divergent Performance in Imports and Exports
In the first half of the year, China's total crude stainless steel output increased by 8.77% year-on-year to 19.85 million tons. Among these, the output of the 300 series rose by 10.5% to 10.52 million tons, the 200 series increased by 4.27% to 5.62 million tons, and the 400 series grew by 14.34% to 3.11 million tons. Although several steel mills implemented production cuts during the first half of the year, the output of each series fluctuated, and overall supply remained high.

In terms of social inventories, China's total social inventories increased by 6.67% year-on-year to 1.11 million tons in the first half of the year. Among these, inventories of the 300 series decreased by 3.26% to 650,000 tons, inventories of the 200 series fell by 3.92% to 200,000 tons, and inventories of the 400 series surged by 62.85% to 260,000 tons. The 300 series exhibited increased production alongside reduced inventories, which may be attributed to factors such as accelerated destocking of low-priced warehouse receipts, unreleased hidden inventories, and increased speculative purchases due to earlier market expectations of production cuts by steel mills.

Regarding imports and exports, according to customs data, China's cumulative stainless steel imports from January to June 2025 amounted to 827,500 tons, a year-on-year decrease of 25.3%. Cumulative exports reached 2.5001 million tons, a year-on-year increase of 5.7%. The net export volume totaled 1.6726 million tons, a year-on-year increase of 33.1%. Excluding the impact of the Spring Festival holiday, export performance was strong in the first quarter, with monthly exports consistently exceeding 400,000 tons. However, in the second quarter, export orders shrank due to U.S. tariff hikes, leading to a decline in export volumes starting in April. By June, exports had fallen below 400,000 tons. Imports decreased due to sustained production cuts by Indonesia's Yongwang.

Driven by rising raw material prices, stainless steel production costs have increased, narrowing profit margins for steel mills. According to the spot cost & profit model, as of September 4, the production cost for 304 cold-rolled stainless steel using externally purchased high-nickel iron technology was RMB 13,114 per ton, with a profit margin of 0.27%. The integrated production cost for 201 cold-rolled stainless steel was RMB 8,218 per ton, with a profit margin of -2.04%. The production cost for 430 cold-rolled stainless steel was RMB 7,590 per ton, with a profit margin of -4.08%.