ESCALATING TRADE TENSIONS DISRUPT GLOBAL STAINLESS STEEL MARKET
The global stainless steel market is, currently, unclear.
Growing trade concerns and volatile raw material costs are causing market
participants to become increasingly apprehensive in their purchasing decisions.
Prices in the US soared, following the introduction of Section 232 tariffs,
while transaction values in the EU and Asia struggled to move up in line with
rising input expenditure. Buyers are now trying to assess the impact on
stainless steel prices around the world, in the coming months.
US producers are benefiting from good margins, but stockists and traders are
concerned about being left with high priced stock, if the US market falters.
The average LME nickel price, during the reference period for the EU and US
September surcharges, fell by 5 percent, compared with the previous month’s
figure. The depreciation of the Turkish lira resulted in reductions in iron and
steel scrap costs, in August. Consequently, alloy surcharges will decline, next
month, for all grades researched by MEPS. However, European mills will attempt
to keep stainless steel transaction prices stable, to bring nominal basis values
back to more reasonable levels. This may prove difficult if weak market
Talks between low-ranking government officials, from the United States and
China, eased tensions and helped to boost nickel prices, following the mid-month
slump. Nevertheless, restrictive US trade policies are likely to continue to
cause volatility in the market, in the near term.
A steady increase in nickel demand is anticipated, particularly from the
electric vehicle sector. However, significant growth in consumption from the
non-fossil fuel car sector is expected to take many years to develop.
Nonetheless, inventory levels for class 1 nickel, held in LME warehouses, have
been falling rapidly, this year and now stand at around 340,000 tonnes. They
peaked at over 470,000 tonnes in the middle of 2015. This was partly due to
stockpiling in advance of the growing need for this type of nickel, which is
also used in battery production. However, stainless steel mills can utilise
lower grade ores (converted into nickel pig iron) and scrap in their furnaces.
The downward trend in LME inventories is likely to continue in the medium term.
This is forecast to have a positive effect on nickel and stainless steel selling
figures, in the next twelve months.
Chinese spot chromium prices began to fall in the middle of July and continued
their negative path, in August. Market values in the EU and US also weakened, of
late. Further downward movement is expected, in the near term. This, coupled
with the appreciation of the South African rand against the US dollar, is
forecast to result in a reduction in the fourth quarter chromium contract price.
The settlement figure is due to be agreed in late September.
Molybdenum values increased, this month, because of rising global oxide costs.
Prices are expected to strengthen further, after the summer holiday period.
Demand in the molybdenum market should improve, in early 2019. This is likely to
put further upward pressure on prices.
MEPS World average stainless steel transaction prices are forecast to weaken
slightly during the remainder of 2018. We predict a modest pickup in selling
figures, early in 2019, with raw material costs moving upwards, in that period.
However, the rate of growth in demand for stainless steel is expected to
decline, next year. This, coupled with competition from new low-cost producers,
is likely to restrict the size of any price increases, particularly in Asia.
Source: MEPS - Stainless
Steel Review - August 2018 Edition
Also See: EU -
Stainless Steel Price Table
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