Tag Archives: Stainless Steel Market

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

BREXIT WILL UNSETTLE THE EUROPEAN STAINLESS STEEL MARKET – MEPS

Following the result of last week’s referendum – the decision for the United Kingdom to leave the European Union – questions arise concerning how the stainless steel market will be affected, both in the UK and elsewhere.

The LME nickel price, along with many other commodity values, slipped in the immediate aftermath of the vote but this is unlikely to represent anything other than a short-term reaction. The same cannot be said for the UK currency. The value of the pound Sterling, relative to other major currencies, has recovered, a little, since its steep drop in the first two days following the vote. However, in the medium term, the pound is likely to remain weaker than its pre-referendum position.

For stainless steel production in the UK, this would result in increased raw material and other input costs, as many of these are commodities which are, largely, traded in US dollars. Conversely, lower labour costs, in euro terms, would help to make British exports more attractive to European buyers.

The key element in determining the UK’s future role in the market will be the trade agreement that the exiting nation strikes with the EU. Without allowing free movement of labour, the electorate’s dislike of which appears to have been a major factor in the referendum result, it would be difficult for the UK to secure tariff-free trade with the single market.

Firstly, tariffs would make British-made stainless steel and other manufactured goods more expensive to European buyers, although, as stated above, a weaker pound will counteract this, somewhat. Secondly, inward investment would be affected. Multinational producers are less likely to invest in the UK if it does not provide free access to the EU market.

This poses a specific threat to UK stainless steel production. Finnish-owned Outokumpu operates the UK’s only dedicated large-scale primary stainless steelmaking facilities. The position of these works, within the group, would be weakened. While Brexit would free the UK from rules preventing state intervention to support domestic industry, it is unlikely that a future British government would act, in the event of any closure.

Whereas the EU moved to protect local stainless steel producers by imposing antidumping duties on Chinese and Taiwanese material, the UK may, with no domestically-owned producer, perceive greater advantage in cheaper imports. Furthermore, in its new situation, it could seek to develop stronger links with China and other growing global powers.

Source: MEPS – Stainless Steel Review – June Issue

UPTURN IN ALLOY SURCHARGES WILL NOT KICKSTART STAINLESS STEEL MARKET

The London Metal Exchange Nickel Cash price climbed by more than 17 percent between February 15 and March 11, this year, peaking at more than US$9000 per tonne, befo re softening and stabilising at around US$8600 per tonne. This will have an inflationary effect on transaction values for nickel-bearing stainless steel grades, in the near term.

The majority of the sharp increase occurred during the reference period for April’s alloy surcharges, in the countries where such extras apply. In Europe, for example, Outokumpu’s surcharge for grade 304 flat products will rise by €42 per tonne, compared with the March figure. This is the biggest month-on-month increase in more than a year.

MEPS forecasts a further, more moderate increase in alloy extras, for May. Historically, such an upturn in effective prices, after a long, downward trend, would signal an increase in purchasing activity, as buyers placed orders in anticipation of rising future transaction values.

On this occasion, however, supply chain participants are not expected to react in the traditional manner. Market observers do not believe that the uptick in nickel values marks the beginning of a prolonged upward curve. LME stocks – more than 430,000 tonnes, at time of writing – remain close to the all-time high level. Furthermore, mining and processing capacity continues to exceed the current consumption of nickel.

Worldwide economic growth remains weak. Consequently, general demand for stainless steel is mediocre, while specific, large-scale consumers, like the oil and gas sector, have scaled down their activities, due to the fall in prices for their products.

In summary, neither nickel nor stainless steel is expected to record significant price advances in the next six months. As a result, customers will continue to buy only for their immediate requirements.

Source: MEPS Stainless Steel Review

US STAINLESS STEEL MARKET ROUNDUP FROM MEPS

Stainless hot rolled plate sales volumes, in the United States, are steady, according to the latest report by MEPS. Consumer confidence has been boosted by low oil prices. Business activity is described as “not great” but is at a higher level than that in Europe. Consequently, suppliers from across the Atlantic are making attractive offers, putting downward pressure on selling values.

Cold rolled coil sales activity has slowed in recent weeks. Many buyers have delayed placing orders in anticipation of lower alloy surcharges in November. This drop-off in demand and imminent reduction in effective prices prevented full implementation of the mills’ proposed basis price hike, which was due to take effect at the beginning of October.

Order activity for stainless steel bar has slowed in October. No upturn is anticipated before the New Year. With low stock levels at service centres, buyers are turning to master distributors to secure material at short notice. Market participants report an increased number of offers from European mills.

Source: MEPS – Stainless Steel Review – October Issue