Rising Nickel Costs Support Stainless Steel Prices as Demand Remains Cautious

China’s stainless steel market entered March with stronger cost support, as higher nickel prices and concerns over raw material supply pushed production costs upward. However, downstream demand remained relatively cautious, leaving the market caught between rising costs and a slower-than-expected recovery in purchasing activity.

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Nickel has been one of the main factors influencing stainless steel prices in recent weeks. Supply concerns surrounding Indonesian nickel ore, together with wider geopolitical and transportation uncertainty, have added volatility to the raw material market. As nickel-related costs increased, stainless steel mills faced greater pressure to maintain their margins.

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By March 10, export offers for Chinese stainless steel coil had moved to around $2,300–2,400 per metric ton FOB, approximately $25 per ton higher than a week earlier. Domestic prices from some major producers also moved upward during the period, reflecting stronger cost support.

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The spot market, however, did not show the same strength. Although March is traditionally considered a stronger period for steel consumption in China, buyers remained selective and many purchases continued to be based on immediate production needs rather than inventory building. Market analysis later that week also showed that the recovery in demand was only moderate despite relatively high stainless steel futures prices.

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Price movements among individual products were also uneven. Market information published on March 11 showed that stainless steel round-bar quotations from Tsingshan had moved lower before recovering slightly. For 304 round bar, prices were first reduced by RMB 200 per ton and subsequently raised by RMB 50, while 316L saw a RMB 300 reduction followed by a RMB 50 increase. Trading sentiment remained cautious after the earlier rise in 316L prices.

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The situation highlights the different forces currently shaping the stainless steel market. Raw material costs are providing support to prices, while higher production levels and restrained downstream purchasing are limiting the room for further increases.

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For the remainder of March, nickel prices, stainless steel inventories and the pace of downstream purchasing are likely to remain the main indicators to watch. A stronger recovery in actual consumption would provide additional support to the market, while continued weak purchasing could keep stainless steel prices within a relatively volatile range.