Category Archives: Stainless Steel Prices

Global Stainless Steel Trade Plagued by Quotas

The introduction, by the United States government, of quotas and tariffs, arising from their Section 232 investigations, reduced the flow of imported stainless steel into the country. Moreover, it enabled domestic producers to steadily lift their prices. As alloy surcharges rose, US mills also raised their basis figures, for grade 304 cold rolled coil, by US$200 per tonne, or 16 percent, between January and July 2018. This contributed to an increase of US$680 per tonne, or 28 percent, in transaction values, over the same period. Buyers, however, considered that this trend went too far. As alloy surcharges have softened, in the past two months, basis figures have also been reduced, resulting in a cut of US$265 per tonne, or 8.5 percent, in effective prices.

European mills, in contrast, were unable to supplement the rise in alloy surcharges with basis price hikes. Indeed, while alloy extras for austenitic coils climbed, during the first half of this year, basis values moved, steadily, in the opposite direction. In recent months, many market participants resorted to making deals using “effective prices,” as the difference between the alloy surcharge and the total transaction value ceased to represent a viable basis price.

The EU’s temporary safeguarding quotas were aimed at preventing material, previously destined for the United States, from being diverted into the European market. While the quota for stainless steel coils has, almost certainly, averted a glut of third country material, buyers believe that they will be able to secure all their requirements, between now and February 2019, within the allowed import tonnage.

Distributors of stainless steel bars, however, estimate that the quota for that product will be exhausted by December 2018. This demonstrates the upward trend in sourcing bars from overseas – notably, from India. Many buyers will now wait until the introduction of more permanent measures, before placing further import orders.

 

Source: MEPS Stainless Steel Review – September 2018

EU Stainless Steel Prices Forecast to Decline in the Fourth Quarter, Recovery Expected in Early 2019

MEPS predicts that EU stainless steel prices will continue to decline, in the short term. Flat product transaction values fell, in September, mainly due to decreases in alloy surcharges.

EU Stainless Steel

Reductions in alloy surcharges have been announced, for October, and further cuts are expected in November. Many customers will, therefore, delay placing orders. EU stainless steel mills will attempt to limit the impact of the decrease in the cost of alloying extras on their effective selling prices, in the months ahead. However, this may prove difficult under current weak market conditions.

Orders on the EU stainless steel producers are expected to reduce due to excessive inventories in the market. Imports are likely to remain competitive, in the short term. The EC safeguarding quotas for flat products will, almost certainly, remain available at the start of 2019. Transaction values are forecast to rise in the first half of 2019, mainly as a result of increased raw material costs, at that time.

Nickel

The September average cash nickel price decreased by approximately 6 percent, month-on-month. The ongoing trade war, between China and the US, continues to worry investors. A strengthening in the US dollar added to the negative pressure on nickel prices. Nevertheless, inventories held in LME warehouses fell to below 230,000 tonnes.

The fundamentals remain positive for nickel – with demand outstripping supply. Growing concerns about a slowdown in the Chinese economy are likely to restrict the potential for a significant upward movement in nickel values, in the short term. An upturn in prices is, however, envisaged, in the first half of 2019. A steady increase in nickel demand is anticipated, particularly from the electric vehicle sector. However, significant growth in consumption from that source is expected to take many years to develop. The downward trend in LME inventories is likely to continue in the medium term. This is forecast to have a positive influence on nickel and, subsequently, EU stainless steel prices, in the next twelve months.

Source: MEPS Stainless Steel Review (Premium Forecast Edition) – September 2018

Stainless Steel Market Disrupted by Escalating Trade Tensions

Global Stainless Steel Market

The global stainless steel market is, currently, unclear. Growing trade concerns and volatile raw material costs are causing market participants to become increasingly apprehensive in their purchasing decisions. Prices in the US soared, following the introduction of Section 232 tariffs, while transaction values in the EU and Asia struggled to move up in line with rising input expenditure. Buyers are now trying to assess the impact on stainless steel prices around the world, in the coming months.

US producers are benefiting from good margins, but stockists and traders are concerned about being left with high priced stock, if the US market falters.

Alloy Surcharges

The average LME nickel price, during the reference period for the EU and US September surcharges, fell by 5 percent, compared with the previous month’s figure. The depreciation of the Turkish lira resulted in reductions in iron and steel scrap costs, in August. Consequently, alloy surcharges will decline, next month, for all grades researched by MEPS. However, European mills will attempt to keep stainless steel transaction prices stable, to bring nominal basis values back to more reasonable levels. This may prove difficult if weak market conditions persist.

Talks between low-ranking government officials, from the United States and China, eased tensions and helped to boost nickel prices, following the mid-month slump. Nevertheless, restrictive US trade policies are likely to continue to cause volatility in the market, in the near term.

Nickel

A steady increase in nickel demand is anticipated, particularly from the electric vehicle sector. However, significant growth in consumption from the non-fossil fuel car sector is expected to take many years to develop. Nonetheless, inventory levels for class 1 nickel, held in LME warehouses, have been falling rapidly, this year and now stand at around 340,000 tonnes. They peaked at over 470,000 tonnes in the middle of 2015. This was partly due to stockpiling in advance of the growing need for this type of nickel, which is also used in battery production. However, stainless steel mills can utilise lower grade ores (converted into nickel pig iron) and scrap in their furnaces.

The downward trend in LME inventories is likely to continue in the medium term. This is forecast to have a positive effect on nickel and stainless steel selling figures, in the next twelve months.

Chromium

Chinese spot chromium prices began to fall in the middle of July and continued their negative path, in August. Market values in the EU and US also weakened, of late. Further downward movement is expected, in the near term. This, coupled with the appreciation of the South African rand against the US dollar, is forecast to result in a reduction in the fourth quarter chromium contract price. The settlement figure is due to be agreed in late September.

Molybdenum

Molybdenum values increased, this month, because of rising global oxide costs. Prices are expected to strengthen further, after the summer holiday period. Demand in the molybdenum market should improve, in early 2019. This is likely to put further upward pressure on prices.

MEPS World average stainless steel transaction prices are forecast to weaken slightly during the remainder of 2018. We predict a modest pickup in selling figures, early in 2019, with raw material costs moving upwards, in that period. However, the rate of growth in demand for stainless steel is expected to decline, next year. This, coupled with competition from new low-cost producers, is likely to restrict the size of any price increases, particularly in Asia.

Source: MEPS Stainless Steel Review – August 2018

Uncertainty and Price Volatility Unsettle the Emerging Steel Markets

EU Safeguarding Measures Influence Stainless Steel Purchasing Behaviour

EU Safeguarding MeasuresThe EU’s recently announced temporary quotas and tariffs on steel imports, arising from the Commission’s safeguarding investigation, might have been expected to push prices of stainless steel upward, in the European market. However, some buyers have chosen to expand their placement of import orders, in the short term, to maximise their own intake of low priced material, before quotas are exhausted. This has the effect of reducing demand for locally produced material and, thereby, places downward pressure on prices.

This should be short-lived. Many stainless steel buyers are wary that, given the long delivery lead times on orders from, for example, the Far East, material ordered now could arrive in Europe after the appropriate quota has been filled and, therefore, incur tariff charges. Consequently, they are more likely to source their requirements from European mills – in turn, applying inflationary pressure, in the regional market.

Source: MEPS – Stainless Steel Review

Mixed Trend in EU Flat Product Steel Prices in July

Divergent Stainless Steel Price Trends Derive From Section 232

Stainless steel markets throughout the world have responded differently to the United States’ announcement, at the beginning of March 2018, of 25 percent tariffs on steel imports and 10 percent tariffs on aluminium.

Uncertainty persisted as temporary exemptions were granted to supplies from selected countries, until the end of May. A quota arrangement was agreed with South Korea. On May 31, the United States confirmed that tariffs will be imposed on imports from its NAFTA associates, Canada and Mexico, as well as the European Union effective from June 1.

In response, the European Commission has launched a safeguard investigation, in an effort to thwart the redirection of steel supplies, previously destined for the US market, into the European Union. This, like the US Section 232 action, is likely to lead to the imposition of import quotas or tariffs.

While some suppliers in Europe and Asia attempted to maximise shipments to the US, in advance of the application of trade measures, the attitude of most buyers and sellers has been cautious. Exports to the United States have declined. Meanwhile, we have many reports of producers elsewhere making competitive price offers in markets that they have not previously explored.

This has resulted in divergent price trends in the different regions. In the light of reduced import tonnages and the impending introduction of tariffs on future shipments, US domestic suppliers have met little resistance to substantial price hikes, in their home market.

Producers in Europe and Asia, conversely, have struggled, in recent months, to raise selling values, by even enough to cover the rising cost of raw materials.

Between February and May, MEPS’ North American average price, for grade 304 cold rolled coil, increased by 15.5 percent. During the same period, the corresponding Asian average rose by just 1.6 percent, in US dollar equivalent terms, while the EU figure dropped by 2.4 percent.

Source: MEPS – Stainless Steel Review

Global Growth In Stainless Steel Output To Continue

Worldwide crude stainless steel production, in 2017, reached an all-time high total of nearly 48.1 million tonnes. This represents an increase of 5 percent, compared with the year earlier figure. MEPS predicts that global output will grow by a further 5 percent, in 2018, to achieve a new record high mark of around 50.5 million tonnes.

USA

The introduction of tariffs or quotas, arising from the United States’ Section 232 action, is likely to alter the patterns of trade between the major stainless steel producing countries. Output in the United States grew by a healthy 11 percent, year-on-year, in 2017. We forecast more moderate expansion, this year.

South Korea & Taiwan

Production in South Korea and Taiwan continued its recovery, having slumped, following the Global Financial Crisis of 2008/9. Output increased by 6 percent, last year, in South Korea, to total 2.4 million tonnes. In Taiwan, production grew by nearly 9 percent, compared with the year earlier figure, to reach almost 1.4 million tonnes. Both countries are expected to record increases of around 4 percent, year-on-year, in 2018.

EU & Japan

Growth is more moderate, in the traditional stainless steelmaking centres of Japan and the European Union. Production increased at a modest pace in both markets, in 2017. Expansion is predicted to continue at a similar rate, in both places, this year.

China

In China, the annual growth rate in stainless steel supply slowed, to 4.7 percent, in 2017, after years of rapidly increasing output. Nevertheless, at 25.8 million tonnes, the country produced over 53 percent of the world’s crude stainless steel, last year. A further increment, of around 4 percent, year-on-year, is forecast for 2018.

Stainless steel production continues to climb most steeply in the “Others” category. India is becoming a major part of the global supply chain, while a new facility in Indonesia, commissioned last year, will also contribute significant tonnages, in the future.

Source: MEPS Stainless Steel Review

 

Section 232 Probe Creates Chaos In Global Steel Industry