I was gonna try to answer this but I'm glad Mete found it first
I'll toss out my overly simplified answer, to see if maybe I would have got it right.
Whether something is magnetic or not has to do with electron spin and how they are aligned. That comes down to atomic structure.
We know that the steel we work with has 2 main structures that we are interested in, Martensite and Austenite. There are others as well, pearlite, bainite, cementite, ferrite etc. but the austenite and martensite are the 2 main ones to talk about right now.
Austenite is defined as a solid solution of carbon in FCC (gamma) iron. Gamma iron is not magnetic.
Ferrite is a solid solution of carbon in BCC (alpha) iron,(alpha iron IS magnetic). Martensite comes about by trapping a carbon atom in ferrite, so you are still dealing with alpha iron, which is magnetic.
In the tool steels we use, austenite is only formed at high temperatures. That is why they turn non magnetic when we heat them to critical temp. When we drop them to room temp we either form ferrite or martensite, both of which involve alpha iron, so then it is magnetic.
300 series stainless steel is an austenitic stainless. It is in austenitic form at room temperature (apparently because of the nickel, didn't know that until now

). So it is in its non magnetic form at room temperature.
Right
