The policy expectation of a slight increase in stainless steel inventory is favorable for both supply and demand

Driven by multiple factors, recent commodity prices have significantly increased, and varieties such as iron ore futures have frequently seen limit ups. Industry insiders said that the policy was expected to be favorable for both supply and demand of stainless steel. Futures and billet prices rose sharply, market sentiment rose, and short-term spot stainless steel prices rose sharply. However, the current rise in stainless steel prices is more driven by emotions and lacks support from terminal demand. If later demand cannot follow up in a timely manner, stainless steel prices will inevitably face the risk of a significant decline after a sharp rise.

After entering March, as the temperature rose and construction sites began to commence, the stainless steel market was relatively active last week, and intermediaries actively replenished inventory despite the bullish outlook in the future. The overall inventory continued to rise slightly.

Analysts say that stainless steel inventory has slightly increased, and the current inventory level has decreased compared to the same period last year. As the market enters the traditional consumption peak season, stainless steel inventory is expected to shift into a downward trend. At present, both market inventory and stainless steel factory inventory are significantly lower than the same period last year, and low inventory provides favorable conditions for the rise in stainless steel prices.

For the stainless steel industry, there is an expectation of continuous improvement on the demand side and a decline in the supply side in terms of policies. The overall supply and demand situation is expected to improve in 2016, which will help boost market confidence.

However, looking ahead to the future, with terminal demand just showing signs of improvement and market inventory still rising, the significant rise in stainless steel prices in the short term is more a result of policy expectations driving sentiment and lacking support from actual market demand. The sustainability of prices in the later stage still needs to be observed, and attention needs to be paid to the initiation of real demand.