STAINLESS STEEL MARKET
SLOW TO RECOVER
MEPS’ recent reviews of the global stainless
steel market have revealed a mood of cautious optimism - a belief
that the bottom of the business cycle had been passed and that sales
volumes and prices would start to increase, albeit steadily, this
year. While that belief persists, there is little empirical
evidence, as yet, to suggest that a recovery is under way.
In Europe, business activity has slowed in February, after a busy
January. Distributors and end-users were sufficiently optimistic to
rebuild their, admittedly, depleted inventories at the beginning of
the year. However, while participants in some sectors and some
countries report improved activity, there has been no significant
upturn in underlying demand and orders on the mills have slowed.
Moreover, stockists complain that their profit margins are being
squeezed, as end-users refuse to accept any basis price hikes agreed
with the producers. In fact, as the mills have tried to follow
January’s small advances with further increments during February,
the distributors have been, for the most part unwilling to pay more.
Consequently, EU average transaction values for type 304 cold rolled
coil have risen by only 1.1 percent since December.
The situation is perhaps, more disappointing in the United States.
As in Europe, there has been a rise in the volume of orders placed
on the mills, in the early part of the year. Although there are
encouraging signs from some consuming industries, the increased
activity is predominantly due to inventory replenishment.
Furthermore, as basis figures have not been changed in the past two
months, effective selling values for grade 304 CRC have risen by
only US$10 per tonne.
In the Far East, the producers’ list prices respond quite quickly to
fluctuations in raw material costs. In this instance, most official
offers for 300 series material have been increased to reflect higher
nickel costs. However, as in the West, buyers have been influenced
by subdued demand and advances in market values for stainless steel
have been moderate.
Notwithstanding the disappointing results described above, we still
believe that the stainless steel market will move in a positive
direction in the near future. Economic indicators continue to
suggest an upturn in real demand. Consequently, producers should be
able to maintain basis values, where applicable, at higher levels
during the first half of 2014 than in the previous six month period.
Additionally, the Indonesian ore export ban will reduce the global
surplus in nickel supply in the near term. This will put upward
pressure on commodity prices and promote higher nickel values during
the second quarter.
Source: MEPS -
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