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Divergent Prices in Global Stainless Steel Markets

Stainless steel flat products ex-mill prices decreased again, this month, in most of the countries surveyed by MEPS. Further reductions are likely, in Western nations, in the near term. Market participants in Europe and North America predict that July/August is likely to represent the bottom of the current price curve.

Transaction values fell sharply, this month, in the United States, under the influence of reduced raw material costs. While nickel values have stabilised, somewhat, in recent weeks, the decrease in the European ferrochrome contract price for the third quarter will affect stainless steel selling figures in the coming months. The US mills’ alloy surcharges for July, represent a further, significant cut, month-on-month. MEPS’ effective figure for grade 304, cold rolled coil, for June, is already over 5 percent lower than the recent peak value, recorded in April. However, it should be noted that this month’s price is more than 20 percent higher than that published one year ago.

Alloy surcharges continue to slide, in Europe. The recent weakness in the LME nickel cost had a negative effect on the calculations for June and July. The reduced ferrochrome contract figure is likely to result in more cuts for August. Furthermore, basis prices began to weaken, this month, and market players foresee additional discounts, in the short term. MEPS’ published transaction value for type 304, cold rolled coil, in Germany, for June, is more than 9 percent below the recent high figure, from April, but remains nearly 20 percent higher than the price recorded in June 2016.

Chinese price formulations react much more quickly to day-to-day fluctuations in raw material values, than those used in most other nations. Consequently, selling figures, in China, have risen, slightly, in recent weeks, in response to upturns in spot prices for both nickel and ferrochrome. Nevertheless, our tabled numbers, for grade 304, cold rolled coil, in June, are more than 23 percent down on the peak figure, published in December 2016, but 2 percent higher than the price reported twelve months ago.

Source: MEPS – Stainless Steel Review – June 2017 Issue

MEPS PREDICTS MODEST UPTURN IN GLOBAL STAINLESS STEEL PRICES

The MEPS world average stainless steel price is expected to extend its slow recovery due to rising raw material costs and local supply tightness in several regions. The world average price for 304 cold rolled coil increased, marginally, this month, to a figure just 3.6 per cent below the number recorded one year ago.

Raw material costs are expected to grow, moderately, from their current levels. The LME average nickel price is forecast to be around 15 per cent higher in the coming year than in the previous twelve month period.

Transaction values in Asia are expected to be quite stable, in the next two quarters, before rising gently, boosted by inventory building, to a peak in mid-2017. Selling figures are likely to soften, in the summer months.

In Europe, increases in basis prices are likely to be restricted, over the next twelve months, by surplus production capacity and competition from imports. Predicted increases in mill input expenditure should lead to rising transaction values, in early 2017. A seasonal, downward price trend is anticipated as the summer holiday period approaches.

In North America, US government tariffs on Asian imports will continue to tighten supply of cold rolled coil and put upward pressure on basis figures. Anticipated rises in raw material costs should result in further increases in transaction values, during the first half of next year. The effective price for type 304 cold rolled coil is forecast to be 6 per cent higher, in August 2017, than this month’s figure.

Source: MEPS – Stainless Steel Review – August Issue

EU STAINLESS STEEL MARKET ROUNDUP FROM MEPS

According to MEPS, purchasing activity for hot rolled stainless steel slowed, in Germany, as the summer holiday period approached. Sellers predict that, if nickel prices remain strong, customers will start to buy more substantial tonnages, in mid-August. European mills are divided over whether to seek basis price increases for September deliveries. Demand is reasonable, in Italy, but imports from Asia have swelled the volume of cheap material in service centres’ inventories

The plate market is subdued, in the United Kingdom. This has been amplified by the onset of the summer holidays. Enquires are plentiful but these are slow to turn into orders. Basis prices edged upward, largely due to the weakening of the pound sterling against the euro.

Alloy surcharges are on an upward trend, in Europe. Local mills are trying to lift cold rolled basis figures in small steps, each month. No such advance was agreed in Germany, for July. European mills’ order books are filling, slowly. Stockists in France are currently relying on service centres for most of their purchases, due to the local producers’ annual closures. Italian distributors are eager to lift basis prices but they face competition from the mills’ own service centres. Imports from the Far East are available for around €100 per tonne less than locally produced material.

Signs of an increase in commercial activity are detected, in the United Kingdom, after a very quiet period. Uncertainty persists, though, following the Brexit vote. Cold rolled basis values increased a little, in July – at least enough to offset the weakening of the pound sterling against the euro. In Spain, end-user purchases are at a slightly lower level than in June but, still, satisfactory.

Stainless bar prices are stable, in France, but advances are forecast, for September deliveries. Demand from some sectors has improved, in the United Kingdom. EU producers are looking to lift basis prices, in the coming months. Delivery lead times are extended but the mills are not yet operating at full capacity. End-users require immediate deliveries, so they rely on stockists. In Spain, effective prices for grade 304 bars are stable but will be pushed up by higher raw material costs in the near future.

Source: MEPS – Stainless Steel Review – July Issue

GLOBAL STAINLESS STEEL PRODUCTION FALLS IN 2015 – RECOVERY EXPECTED THIS YEAR

Worldwide crude stainless steel production in 2015 totalled just over 41.5 million tonnes. This represents a decrease of 0.3 percent, compared with the peak figure, achieved in the previous year. MEPS predicts that global output will grow by around 1.1 percent, in 2016, to reach a new all-time high mark of 42 million tonnes.

Outturn fell, slightly, year-on-year, in most of the established stainless steelmaking countries and regions. Output in the developing nations, continued to expand. We forecast that production will recover, to return increased tonnages in 2016, in all areas, except China. Following many years of rapid expansion, Chinese output peaked, in 2014, at 21.7 million tonnes. This equates to 52 percent of the global outturn, in that year. In 2006, China had produced only 5.3 million tonnes, or 18 percent, of global crude stainless steel.

Having been a net importer, in the early part of the twenty-first century, China has increased its production capacity, in recent years, to a point far in excess of its own requirements. Much of this surplus material has been exported, often at very low prices, compared with prevailing market values. In response, many governments around the world have introduced antidumping measures against Chinese imports. With export opportunities thus reduced, and domestic economic growth slowing, the country’s stainless steel output fell by 0.6 percent, year-on-year, in 2015. MEPS predicts a further, small decrease, this year.

Following lower production figures, last year, compared with those in 2014, we forecast output to recover and record positive growth in the European Union, Japan and the United States. In the latter country, in particular, a healthy increment of more than 5 percent is anticipated. This would take the annual total to its highest point in ten years, at around 2.45 million tonnes.

South Korea bucked the trend of the traditional stainless steel producing nations, by achieving growth of around 10 percent, year-on-year, in 2015. The estimated annual output, at more than 2.2 million tonnes, represents the country’s highest total since 2006. More modest expansion, of approximately 2 percent, is predicted for this year.

Taiwan’s annual production has hovered around the 1.1 million tonnes mark for several years. The 2015 figure showed no change from the outturn recorded twelve months earlier. A moderate increase, of just over one percent, is forecast for this year.

Source: MEPS – Stainless Steel Review – April Issue

STAINLESS STEEL COLD ROLLED COIL MARKET ROUNDUP FROM MEPS INTERNATIONAL LTD

Demand for cold rolled coil from the automotive and other manufacturing sectors, in the United States, has improved according to MEPS. Delivery lead times are long and shipments from the mills are often late. This has encouraged end-users to buy from stock. The producers’ proposed basis price hike for July has been pushed back to August. Buyers may demonstrate further resistance to increases.Stainless Steel Review

Despite Japan’s leading producer, NSSC, trying to raise domestic list prices for austenitic coils, market transaction values have remained unchanged, this month. In South Korea, imports from Chinese and other East Asian suppliers have increased significantly during renovation work by the local producer, Posco. The company may lose market share, in the longer term, as the quality of standard items from China has been found to be satisfactory.

Customers in Taiwan remain cautious despite the relatively stable nickel costs in recent months. Underlying demand is disappointing. The local mills have cut domestic prices for austenitic coils. Ferritic transaction values are unchanged. While Chinese producers have differing views on domestic list prices, market values for type 304 coils have fallen in the past month. Some mills are offering material at discounted figures, in an attempt to increase their cash flow. Selling values for grade 430 coils, which had been stable for several months, recorded a small reduction in mid-July.

There has been a moderate advance in austenitic coil basis figures, in Germany. Buyers in France report increased basis numbers for coil and sheet from stock as well as new production. There is not much imported steel available on the French market, at present, as there is little price differential between European and third country coils. However, there is plenty of Asian material in Italian stockholders’ inventories which, having been bought when prices were lower, is keeping current values down.

Cold rolled coil and sheet sales activity in the UK has been quite good in June and July but profit margins remain tight. Some items are in short supply. Buyers anticipate nickel costs rising during the second half of 2014. Austenitic basis figures in Spain are unchanged, this month, but the mills have indicated their intention to increase prices in September. Purchasers are doubtful that this can happen unless it is supported by improved demand or rising nickel costs.

There has been no real sign, as yet, of an upturn in the Swedish stainless steel market. There is plenty of material available and no speculative buying. Some stockists are undercutting the mills in order to shift tonnes. Market values have grown in the Netherlands but it is possible to get one-off deals, from the mills, at lower prices. Demand is fair, at present. Market participants hope it will improve in the remainder of the year. Consumption is reasonable, in Denmark. Sellers’ order loads are at the normal level for the time of year. Regional mills’ schedules are quite full.

Source: MEPS – Stainless Steel Review – July Issue

STAINLESS STEEL PRICES AT CROSSROADS

Global stainless steel prices are going through a transitional stage. Transaction values in June were pulled in all directions by a variety of different market forces.Stainless Steel Review

After rising relentlessly since the beginning of 2014, the LME nickel price peaked in mid-May, at over US$21,000 per tonne. Values have fallen back since then, mostly fluctuating in a range between US$18,000 and US$19,000 per tonne in recent weeks.

Consequently, in markets that employ an alloy surcharge system based on the previous month’s raw material costs, notably in Europe and North America, effective prices for June are considerably higher than they were in May. In China, on the other hand, selling values respond more quickly to changes in input costs. MEPS figures for that country, based on market prices in the third week in June, are lower than they were four weeks earlier.

Moreover, there has been an increase in purchasing activity, in many markets, in the past couple of months. This may be supported by improving underlying demand or it could be driven by stock replenishment and technical buying during a period of rising prices. Producers in several countries have used these positive signs to support small basis price increases, in addition to the soaring alloy extras. Some mills are hoping for further increments during July.

However, as the price trend levels out, customers are less likely to make speculative purchases. Furthermore, stock building has been completed and business activity will slow in many parts of the world during the summer holiday and shutdown period. Consequently, suppliers may find it difficult to achieve further basis price increases in the short term.

The reversal in the direction of nickel costs has arrested the rapid rise in alloy surcharges for austenitic grades. Indeed, some producers’ July figures for type 304 flat products are slightly lower than those for June. This will only add to the usual, seasonal lethargy in stainless steel buying.

Supply chain participants will be hoping that the positive sentiment perceived in recent months is indicative of a real upturn in demand. Order tonnages in the weeks following mills’ and end-users’ summer stoppages will give some sign of the future direction of the market.

Source: MEPS Stainless Steel Review