The invention concerns a process for producing low oxygen, essentially carbon free stainless steel powder, which comprises the steps of preparing molten steel which in addition to iron contains carbon and at least 10% of chromium, adjusting the carbon content of the melt to a value which is decided by the expected oxygen content after water atomising; water-atomising the melt and annealing the as-atomised powder at a temperature of at least 1120.degree. C. in a reducing atmosphere containing controlled amounts of water. The invention also concerns a water-atomised powder including 10% by weight of chromium and having a carbon content between 0.2 and 0.7, preferably between 0.4 and 0.6% by weight and an oxygen/carbon ratio of about 1 to 3 and at most 0.5% of impurities, as well as the annealed powder obtained according to the process.