The price range of spot 304 cold-rolled stainless steel, for instance, climbed to 14,000-16,000 yuan/mt in the second half of this year, from 14,000-15,000 yuan/mt in the first half of the year. Near-term prices will move in line with costs, SMM expects.

The raw material nickel input for stainless steel primarily comes from ferronickel (with a grade above 15%), nickel pig iron (NPI), refined nickel, intermediate nickel products, and scrap stainless steel.

Supply of ferronickel in China will be affected by Indonesia's ore export ban from 2020, but rising NPI capacity and higher grade in Indonesia will help to plug some supply shortfall.

SMM estimates the proportion of NPI in the feedstock mix for stainless steel close to 60% in 2020, with that of refined nickel around 8%. The share of stainless steel scrap used as raw materials will likely exceed 20% with the standardisation of the recycling system in China.

On the downstream front, petrochemical and equipment sectors will remain the key driving force behind stainless steel consumption.

Demand from traditional sectors of catering appliance, building decoration, and home appliance will stabilise in the upcoming three years, while highlights in growth are seen from the emerging markets of stainless steel water pipe and stainless steel roof, Shuo Bao believes.