Worldwide stainless steel sales activity and prices are going through a subdued phase at present, according to MEPS. A seasonal slowdown is to be expected as producers, distributors and end-users all strive to minimise their inventories for the end of December, which is, for many, their financial year-end.
Other factors have contributed to the current lull. The LME nickel cash price fell by more than 25 percent between early September and late October. This resulted in substantial cuts in alloy surcharges, for austenitic grades, in November and December. The knock-on effect of this has been further delays in purchasing by customers, as they await the low point in the price cycle before placing their orders.
There are some bright spots. Business activity has been increasing in the United States. Basis values for hot and cold rolled coils have increased, although, of course, this has not been enough to counteract the effect of falling alloy surcharges. On the other hand, in Japan, an upturn in demand has been sufficient for producers to maintain their effective list prices, this month. Transaction values on the open market, in that country, have even increased a little.
However, consumption in the rest of the Far East is disappointing and market participants do not anticipate an upturn until after the Chinese New Year. Business is also subdued in most of Europe and there may be no immediate, seasonal pickup in sales or basis prices at the beginning of 2015.
Nickel supply remains in surplus. Since the Indonesian ore export ban came into operation at the beginning of 2014, this source of nickel has been, in part, replaced by material from the Philippines and New Caledonia. However, there has been some depletion of the nickel stockpiles of Chinese nickel pig iron and stainless steel producers.
LME nickel stocks have recently been at all-time high levels. Some observers predict that the Chinese situation will result in a reduction in these stocks at some point in 2015. This would trigger a change in speculators’ technical trading behaviour, which could, in turn, precipitate rising nickel prices and increased purchasing of nickel and stainless steel.