Stainless Looks to Break Out

The following is a market-related report by the Bureau of International Recycling. The report touches on the short-term market outlook for stainless steel, primarily from the European perspective.

Following the de-stocking phase in the 4th quarter, most stainless steel consumers have come back into the market in January seeking higher volumes.  As earlier reported, demand for stainless steel scrap will far outpace the supply, which forces consumers to decrease scrap charges and purchase higher volumes of nickel. 

Most consumers appear to have covered their January requirements prior to the hike in nickel prices.

The dramatic reduction in demand for special alloys and aerospace materials still continues. Titanium in particular has seen prices fall back and the view is that prices are at a bottom level.

The opening of the LME nickel market after the holiday period saw an increase to $6300 by Jan. 8th, compared to a closing figure on Dec. 28th of $5670.

The reason for the sharp increase is to some extent to do with the announcement by Norilsk Nickel of its intention to hold back exports to the West during the first two months of the year. The more likely explanation however, is a need for speculative short positions to be covered, which can result in a sudden fall-back of nickel to the mid $5000 by the end of this month.

In any event, the short-term situation on nickel is unclear.

Expectations in the short and medium term are for higher demand from consumers with continued low availability of scrap. The continued reduction in percentage of scrap charges faced by stainless consumers could lead to increased nickel consumption and therefore higher nickel prices. We also anticipate a short to medium term stability in ferrochrome prices.

We (the BIR) still anticipate an increase in stainless steel production of 5 percent during 2002, which should see continued long-term good demand for stainless steel raw materials.

Russian imports still continue to be controlled into Europe, which has contributed to the fall in stainless scrap generation.