Stainless looks for direction

Stainless looks for direction

Departments - Nonferrous

Several scrap dealers say the Indonesian government may ease some of its ore export restrictions, which could free up nickel that is warehoused in Indonesia.

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September 3, 2014

Determining the direction of the stainless steel market is challenging, with one scrap dealer saying there are too many unknowns.

China is a considerable factor influencing the market, producing more than half of all the world’s stainless. According to a report from the U.K.-based consulting group Meps, Chinese stainless production exceeded all expectations during the first half of 2014 and could end up growing by 6.4 percent for the year, reaching annual production of 20.2 million metric tons.

Meps says this growth could push global production to 40.2 million metric tons, topping 2013’s global production by 5.7 percent.

Even though China produces more than half of the world’s stainless, its production capacity is not heavily dependent on scrap but on nickel pig iron. To manufacture this material, China has traditionally imported nickel from Indonesia. This supply channel has been challenged, however, as the Indonesian government banned the export of nickel and other ores beginning Jan. 1, 2014.

 

 

Several scrap dealers say the Indonesian government may ease some of its ore export restrictions, which could free up nickel that is warehoused in Indonesia. This recently expectation has softened nickel prices.

Stainless scrap dealers also are juggling the statuses of the European and the U.S. markets.

EU stainless steel production for the first six months of the year reached roughly 4 million metric tons. Forecasting for the full year, EU stainless steel production is expected to reach 7.55 million metric tons, a 5.7 percent increase from 2013, according to Meps.

Nickel prices increased by as much as 56 percent in the first half of 2014, reaching $22,000 per metric ton in May. However, as of early August, prices declined to $18,500 per metric ton.

Finland-based Outokumpu estimates fairly healthy demand and pricing for stainless in the third quarter. In a report to shareholders, Outokumpu CEO Mika Seitovirta says, “During the second quarter, we saw interesting developments in the stainless steel market. {The] nickel price continued its sharp increase, peaking above US$21,200 per [metric ton] in May and averaging 26 percent above the first quarter. Even more importantly, stainless steel demand continued to recover, and base prices increased moderately in both Europe and U.S. Import levels into Europe were exceptionally high, close to 30 percent, reflecting the turbulence in the Asian stainless steel market.”