Section 232 Action Creates Ripples Throughout Stainless Steel Markets
Divergent trends have emerged, in worldwide stainless steel markets, in the wake of the United States government’s Section 232 deliberations. Acting on the recommendations of the report arising from the investigation into the effect of foreign-produced steel on US national security, President Donald J. Trump announced a tariff of 25 percent, to be applied to all steel imports into the United States, effective from March 23.
American stainless steel producers and distributors alike acted swiftly, applying increases to their selling prices. While this can be seen as taking advantage of the rising cost of material from overseas competitors and a predicted tightness in the supply of stainless steel, it was hoped that this move would discourage panic buying and, to some extent, avert that shortage.
Agreements were soon made with many of the United States’ leading trade partners, granting them exemption from the immediate imposition of tariffs. However, in a number of instances, the action is merely delayed, pending further negotiations. Consequently, US customers and traders remain reluctant to place orders with suppliers from certain countries, for fear that tariffs could be re-imposed by the time material is delivered. In this environment, it should be possible for local sellers to maintain their elevated prices, in the near term.
In other regions, this development has raised the spectre of a glut of stainless steel, as some producers lose their current outlets in the United States. Market prices have weakened, accordingly.
In Europe, despite encouraging domestic sales volumes, in the early part of this year, and a perception of strong underlying demand, stainless steel flat product basis values slipped, in March. They could decline further, in April.
Producers in South Korea were unable to secure, in March, the increases that they thought were justified by earlier rises in raw material costs. Now, LME nickel values are believed to have passed their peak, for the current cycle, and Chinese stainless steel coil market prices have been sliding, in recent weeks.