BIR Autumn Roundtables: Stainless Production Falls Short of Expectations

The scale of China’s stainless steel scrap usage will remain dependent on the LME (London Metals Exchange) nickel price, according to the guest speaker at the Bureau of International Recycling’s (BIR) Stainless Steel & Special Alloys Round-Table in Munich held in late October.

Sven Tollin, chief statistician at the Portugal-based International Nickel Study Group (INSG), charted the steep rise in China’s nickel pig iron (NPI) production - from zero in 2005 to around 170,000 metric tons in 2010 - and also the “enormous” decline in the country’s stainless scrap imports from approaching 380,000 metric tons in 2009 to nearer 80,000 metric tons last year.

NPI became a preferred option in China when LME nickel prices were higher than, typically, around $20,000 per metric ton, it was suggested. According to Barry Hunter of U.S.-based Hunter Alloys LLC, the ability of Chinese stainless producers to quickly switch between the two raw materials, depending on LME nickel prices, represented potentially “a fundamental shift in the market”.

BIR delegates also learned that the INSG is projecting primary nickel usage increases of around 6 percent for both 2011 and 2012; however, production is expected to increase by 11 percent in 2011 year and potentially an additional 9 percent in 2012. Therefore, there will be no shortage of primary nickel in the market in the near future, Tollin indicated.

Michael Wright of ELG Haniel, chairman of BIR’s Stainless Steel & Special Alloys Committee, noted that global stainless steel production is likely to total around 32 million metric ton in 2011 - well short of the 35 million metric tons previously projected. The post-summer pick-up in demand for stainless steel products was not as strong as had been hoped, while the outlook for the fourth quarter of 2011 and the first three months of 2012 remained “uncertain,” he added.

In his review of the U.S. market, Hunter suggested that domestic mills have been showing little demand for stainless steel scrap, but that the potential for a significant reduction in scrap availability in the fourth quarter of 2011 and the first quarter of 2012 has meant an upward price trend. However, there was still some willingness to hold on to material, he added.

In other developments mentioned at the Round-Table, Ahmad Sharif of Sharif Metals Est., confirmed in his Middle East report that the Jordanian government has announced a decision to impose a $70-per-metric-ton duty on exports of steel/stainless steel scrap, which “is impacting the export market.” And Ildar Neverov of Steelway Limited Co. highlighted ongoing difficulties in obtaining payments from Russian stainless steel scrap consumers - a situation not helped, he suggested, by frequent changes in mill management teams.

According to the superalloys report, which was authored by Keywell’s Phil Rosenberg and summarized in his absence by Danny Fischer of OneSteel Recycling, secondary titanium demand has slowed as a direct result of weaker ferrous and stainless steel markets, with no pick-up anticipated for the balance of 2011.

The 2011 BIR Autumn Round-Table Sessions were Oct. 23-25 in Munich.