Rising Costs and Section 232 Drives US Stainless Steel Prices Upwards
Global stainless steel transaction values increased, in February, reflecting the rising cost of raw materials – in particular, nickel and ferromolybdenum. Buyers are, generally, optimistic about underlying demand but not sufficiently to agree to price hikes that represent more than the increase in the mills’ input expenditure.
Producers in the United States announced further discount cuts – or basis price rises – for flat products, to be effective from 1 March. In the light of the current supply/demand balance, it may be considered difficult for suppliers to justify this move, following other, recent increases. Indeed, end-users are already expressing their displeasure with the upward trend in transaction values.
Sellers, though, may be encouraged by the prospect of tariffs or quotas being applied to imported material, as a result of the recent Section 232 investigation. The report found that the United States’ government would be right to protect its domestic steel industry, on the grounds of national security. The U.S. President has been presented with a range of recommended actions, including tariffs or quotas to be applied to all, or a selected group of countries. He must decide, by 11 April 2018, which, if any, of these measures to implement.
Whilst it is not definitively clear that such measures would apply to any, or all, stainless steel products, the potential effects are already being seen. Buyers are reluctant to place orders on overseas suppliers – especially from the countries that may be subjected to the most severe restrictions – mindful that tariffs could be in place by the time this material arrived.
The implementation of these measures would lead to a realignment in international stainless steel movements. Producers in East Asia, in particular, would need to seek out new markets, to replace the tonnages currently sold to the United States. A number of European mills also make regular shipments, across the Atlantic Ocean.