Uncertainty is the Operative Word for Stainless Steel Markets in Short Term

According to Michael Wright of ELG Haniel GmbH, a Germany-based metals firm, the global production of stainless steel is likely to exceed 30 million metric tons this year compared to less than 24 million metric tons the previous year, with 50 percent of this output likely to be from emerging markets such as China, India, the Middle East and South America.

In remarks given during BIR’s Stainless Steel & Special Alloys Committee meeting, held during BIR’s spring convention in Istanbul, Wright, also chairman of BIR’s Stainless Steel Committee, added that current market conditions are “fragile at best” while, “great uncertainty” surrounds prospects for the third quarter.

David Wilson, director of Metals Research at Société Générale Corporate & Investment Banking in the UK, confirmed Wright’s outlook, noting that China remains the “main driver” of stainless production growth.

Wilson suggested that China’s annual output could grow from more than 11 million metric tons this year to around 16 million metric tons by the year 2014. In that same four-year timeframe, Wilson expected world stainless steel production to reach a “conservative” 38 million metric tons.

Wilson forecast that nickel markets would move into deficit this year, while London Metals Exchange prices would occupy the range of $20,000-$24,000 per metric ton over the next several months. A return to restocking and end-user consumption would push the price average to $25,000-26,000 per metric ton in the fourth quarter.

Another guest speaker, Cengiz Onal, sales manager of Eti Krom Inc. of Turkey, underlined India’s rapid emergence as a stainless steel powerhouse. Likely to become the world’s third largest producer next year when its annual melting capacity is scheduled to reach 3.3 million metric tons, India’s stainless steel production could near 6 million metric tons per year by 2015.

Good demand from India’s stainless steel producers has increased scrap imports by 22 percent this year, according to Anand Gupta of Ambica Steels. The Indian government has also reduced the import custom duty from 5 percent to 2.5 percent on all stainless steel and special alloys scrap. Availability of scrap from the domestic market is “pretty good”, he says.

The Asian report, delivered by Mark Sellier of OneSteel Recycling, highlighted “very tight” scrap availability in the region - “exacerbated over recent months by the aggressive buying coming out of Europe”. Asia’s stainless mills are still operating at near-full production capacity and are expected to continue at these levels throughout the quieter summer period.

The Middle East report provided by Ahmad Sharif of Jordan-based Sharif Metals Est., reflected reasonable scrap availability although suppliers and yard owners “are adopting a wait-and-see policy while holding on tight to unsold materials”.

Ildar Neverov of Scrap Market Ltd., emphasized that Russia’s domestic market is becoming “more powerful” in terms of stainless scrap consumption.

Barry Hunter of Hunter Alloys LLC, based in the United States, anticipates “a great deal of caution being expressed by mills across the United States in relationship to future purchasing” such that “spot buying will once again become the norm”.

Phil Rosenberg of U.S.-based Keywell reported that the high temperature alloy and titanium markets have witnessed steady improvements in pricing and volumes this year. Supply remains tight “and the value for recycled material as compared to virgin remains quite close”.