According to MEPS, stainless steel sales have been surprisingly subdued since the summer holiday season. Most market participants predicted an upturn in demand during, what is traditionally, one of the busiest periods of the year.
While a few niche sectors have reported strong results, most sellers of stainless steel have found the past month, or two, very quiet indeed. This, in turn, has had a restricting effect on selling values. Both basis figures and surcharges were expected to contribute to rising transaction prices in September and October. As it transpired, basis values in Europe, for example, were little changed, this month, and, notwithstanding the wishes of the mills, substantial increases in October are unlikely.
Mediocre demand has, certainly, played a part in the situation. An upturn in manufacturing activity in the developed world, which has been anticipated for some time, has continually failed to materialise. In fact, countries such as Sweden and Germany, whose industrial activity has held up better than most, since the Global Financial Crisis, are now showing signs of slowing down.
This has been exacerbated by the weaker-than-forecast nickel price trend. Market participants were aware of a possible ban on unprocessed ores by the Philippines – similar to that imposed earlier this year by the government of Indonesia. This would possibly lead to a global shortage of nickel in the medium term. However, it was announced, in early September, that no such ban would be enacted in the foreseeable future. This outcome precipitated a negative outlook for nickel values, as the LME cash figure fell by 13.5 percent in two weeks.
As a result, nickel costs decreased at a time when many people had anticipated an upward curve. This has coincided with the recent agreement of lower chromium prices for the fourth quarter. Although next month’s alloy surcharges are slightly higher than September’s, transaction values in October are likely to represent an underwhelming high point until the, still-predicted, uptrend in the first half of 2015.