Nickel, Stainless Expected to Experience Tightness

Simon Merrills of ELG Metals said that Asia produces less industrial scrap because it is further processed to make flatware and similar consumer goods.

He said that reclaimed scrap comprises 70 percent of the global scrap market, though demand has exceeded supply for many years. He added that the price of scrap is the main driving force behind its availability, with higher nickel pricing bringing out more stainless scrap.

Western Europe is the largest source of stainless scrap followed by the U.S., Merrills said. China is much lower on the list largely because of its further processing of reusable scrap into flatware and the like.

However, China’s demand for stainless is growing at a rate of 18 percent annually. ELG forecasts that by 2012, China will consume 9 to 11 million tons of stainless steel.

“There was an amazing pick-up in price throughout 2003,” Jim Lennon of Macquarie Bank Group said of nickel, citing a four-fold increase in nickel prices from 2001 to 2003.

He said that prices overshoot dramatically in late 2003 and early 2004, having grown by $3 a ton.

Lennon added that the market is responding to high prices and a perceived shortage, with scrap rationing rising in Europe as stainless production falls. He said that there was a 20 percent increase in scrap supplies in the first quarter of 2004 compared to last year’s first quarter. However, China destocked heavily in the first quarter of the year following overstocking in the first quarter of 2003.

Barry Waters of the Nickel Institute said that nickel use for the past 40 years has been driven by the demand for 300-Series nickel-containing stainless steel.

Waters said that approximately 50 percent of stainless use is in capital goods, while roughly 50 percent is in consumer goods. Some portion of consumer goods consumption of stainless is susceptible to substitution by 200 Series and 400 Series, which have less corrosion resistance and availability than 300 Series. 

 The ISRI Convention was April 26-29 at the Mirage in Las Vegas.