BIR Group Forecasts Stainless Shortages

The outlook for stainless steel is trending positive, according to several speakers at the BIR’s recently concluded Spring Meeting. While stainless shows some positives, titanium is expected to remain in the doldrums through the next several quarters.

Christer Wallsten, director of Raw Materials at AvestaPolarit in Sweden, noted that his company was investing Euro 940 million ($887 million) in expanding production at its Tornio facility in Finland, thereby helping to boost AvestaPolarit’s melting capacity from 1.75 million metric tons in 2000 to 2.75 million metric tons in 2004.

Wallsten also noted that analysts’ forecast nickel prices remaining around $3 per pound in the longer term but added that, for the short term, he believed ‘we will see something more exciting’.

According to Michael Wright, chairman of the Stainless Steel & Special Alloys Committee,  scrap availability in the main EU stainless steel consuming countries fell by 24% last year - due in no small part to curtailment of exports from the former Soviet Union of up to 55-60 percent Wright also is with ELG Haniel Metals in the UK.

Global crude stainless steel production was expected to increase by 6.1 percent this year to around 19 million metric tons thanks mainly to new capacity at North American Stainless in the United States, as well as melting increases at ALZ and AvestaPolarit. However, stainless steel scrap availability was unlikely to meet this increase in production, with the result that mills would have to use more nickel, chrome and iron units, Wright added. Scrap ratios were expected to fall to 43.7 percent in 2002 compared to 47.3 percent in 2000.

Wright warned that any rise in stainless steel scrap availability throughout this year could bring a repeat of 2001 ‘where both LME nickel prices and stainless steel scrap prices fell back dramatically in the second half of the year’.

In his U.K. market report, Wright pointed out that AvestaPolarit was due to increase production by 8-9 percent this year to 530,000 metric tons following the installation of a billet caster at the SMACC works in Sheffield.

Reporting for the United States, Barry Hunter formerly with Keywell LLC, said stainless steel flat production was heading into ‘unchartered waters’ given that North American Stainless was about to ramp up melt production based on increased purchases of scrap and primary alloys. NAS had advised a melt capacity of 800,000 metric tons per year - almost 75 percent of total, current US production.

NAS had built up ‘a significant tonnage of revert scrap’ to insulate itself, if necessary, against ‘run-away scrap pricing patterns’, Hunter added. Overall, scrap supplies in the United States remained tight mainly due to decreased manufacturing activity. Other market reports reflected a similar downturn in scrap availability, with Switzerland putting the decline in generation at 20 percent this year, while Germany acknowledged an 18 percent fall in consumption during the early months of this year due to a decrease in scrap availability.

A report prepared by Stuart Freilich of Universal Metal Corp., a U.S.-based operation, underlined the huge impact of the September 11 terrorist attacks on the titanium sector. According to Freilich, the revert titanium market had ‘ceased to exist’ with mills operating today at only 40-50 percent of capacity. Barring any further terrorist attacks or a major increase in oil prices, he anticipated no change in demand for titanium, nickel and nickel cobalt scraps until mid 2003.