Stainless Markets Expected to Remain Tight

Speakers at the recently concluded Bureau of International Recycling meeting said that the currently increased availability of stainless steel and special alloy scrap was unlikely to persist throughout this year.

Sandro Giuliani, chairman of the Stainless Steel and Special Alloy Committee, suggested that “this higher scrap availability will probably not continue for the rest of the year because it is partially due to stocks that have been liquidated by now.” Giuliani alsoi si head of Giuliani Metalli-Cronimet Group, an Italian-based company.

In his report on the U.S. market, Past Chairman Barry Hunter of Hunter BenMet Associates predicted a return to tighter conditions in the third quarter of 2004.

While many scrap dealers were talking in terms of a shortage of scrap, figures collected from European steelworks indicated that availability had improved by as much as 15 percent from last year and by a further 15 percent in the first quarter of this year, said Giuliani. The external scrap ratio had averaged 37.2 percent last year but would probably exceed 38 percent this year.

World production of stainless steel had grown by 7 percent to 22 million metric tons last year, and European mills remained bullish about prospects this year despite uncertainty surrounding the effects of EU enlargement and steps taken by the Chinese authorities to curb their overheating economy, according to Giuliani.

Hunter spoke of the ‘domino effect’ created by the economic measures recently adopted by China, leading to a substantial fall in scrap purchasing prices. Strong melt programs were still reported from the United States, with North American Stainless - the nation’s leading scrap buyer - continuing to melt near capacity.

This generally upbeat tone was also echoed in the presentation prepared by Stuart Freilich of Universal Metal Corp., a U.S.-based company.

Build rates in the aerospace market had been higher than anticipated and sales were expected to grow by as much as $10 billion during 2004. Analysts were forecasting ‘many good years of business ahead’, he added.

In an overview of the stainless steel market in Russia, Ildar Neverov of Teplovtorresource said domestic plants had been unable to purchase sufficient quantities of scrap owing to the higher prices available on the export market and to non-payment of suppliers.

Having called for a removal of ‘discrepancies and contradictions’ within Russia’s metals-related legislation, Neverov noted his country’s 15 percent export duty on stainless steel scrap and predicted customs duties would soon be in line with World Trade Organization requirements.

According to the guest speaker at the BIR Stainless Steel & Special Alloys Committee meeting in Berlin, China was expected to double its stainless steel cold rolling capacity by 2007 while Central/Eastern Europe harbored ‘terrific growth potential’ for the consumption of cold rolled flat products.

Jan Bender, Head of Sales Coordination at ThyssenKrupp Nirosta GmbH in Germany, went on to warn that stainless steel manufacturers were unable to pass on all of their raw material cost increases and that ‘clients are beginning to look around for alternative materials’.

Bender acknowledged a ‘boom’ in 200 series stainless steel production in both India and China but suspected these materials would not offer ‘real competition’ for 300 series products in the longer term given their comparative corrosion resistance characteristics.