Falling Raw Material
Costs Undermine Stainless Steel Prices
A broadly common pattern is
revealed from MEPS’ research, this month, across all products and
all geographical regions. Stainless steel prices are falling –
predominantly due to steelmakers’ reduced raw material costs.
Consequently, buyers are minimising their purchases as they wait to
see how far values will decline before bottoming out.
Transaction figures climbed during the early months of 2017,
encouraging speculative buying, from stockists and traders, and
precautionary purchases from end-users. This resulted in most supply
chain participants building their inventories.
The upturn in prices was supported by a perceived recovery in real
demand. Stainless steel market participants are now more confident,
that end-user consumption is improving, than they have been for some
The supply of nickel tightened in 2014, when the government of
Indonesia banned the export of unprocessed laterite nickel ore – the
raw material for nickel pig iron. The rationale for this move was to
encourage investment in processing facilities in Indonesia and to an
extent, this has happened. As some of these new plants have come on
stream, the export ban has been eased.
Indonesia’s place as the main supplier of nickel, especially to
China, was taken by the Philippines. This source was placed in
jeopardy, last year, when a new Environment Secretary, Regina Lopez,
proposed the closure of more than half of the country’s nickel
mining capacity, citing pollution issues. Ms. Lopez, however, was
recently removed from office, and these policies are likely to be
Ferrochrome contract prices rose steadily during the second half of
2016 and, more sharply, at the beginning of this year. However, a
downward adjustment in selling values was agreed for the second
quarter of 2017. Further cuts are forecast for the third trimester’s
These trends in the stainless steel producers’ input costs promoted
enthusiastic purchasing during the early months of this year and the
more subdued atmosphere of recent weeks.
Source: MEPS -
Review - May 2017 Issue
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