Stainless steels are corrosion resistant alloys which are widely used in consumer goods and industrial equipments. Stainless steels contain scarce and energy intensive elements such as Ni, Cr, Mo, etc. So, closed loop recycling is preferable for sustainable production of stainless steel. However, some parts of stainless steel are not separate from ordinal steel scraps in recycling processes and not recycled as "stainless steel". The objective of this study is to analyze the dynamic material flow of stainless steels in Japan and assess CO₂ emissions reduction potentials by promotion of closed loop recycling of stainless steels in the future. First, the authors analyzed material balance of input elements, i.e. Fe, Ni and Cr, in the production of stainless steels in 2002 to figure out the material flow of stainless steel which can not be obtained from statistics. The amount of post-consumer stainless steel that would come into society in the future was estimated by PBM (Population Balance Model). It was found that only 2% of post-consumer stainless steel of Fe-Cr alloys was collected as stainless steel scraps and the rest was collected as ordinal steel scrap. On the other hand, approximately 95% of post-consumer stainless steel of Fe-Ni-Cr alloys was collected as stainless steel scraps. CO₂ emissions reduction potential by the increase of 1% in closed loop recycling of stainless steel scraps of Fe-Cr alloys was estimated at 75000t/year by using LCA.