Stainless Steel Shortages May Arise

"It seems to be there is not enough scrap in the world," he added

Moll also noted that the 300 series had seen its share of the world stainless steel market fall below 65 percent last year while sky-high nickel prices could prompt this share to fall as low as 55 percent by the year 2015. He urged the scrap industry to approach its producer customers and assure them that scrap remains the "value source" for nickel in the long term.

In his review of conditions in Europe, Sandro Giuliani of Italy-based Giuliani Metalli/Cronimet Group suggested that the stainless scrap market had switched "from surplus to shortage" earlier this year. Key factors in the market included competition among dealers, an increase in nickel prices, and exports to the Far East. The shift towards upgraded ferritic qualities and low-nickel grades had not reached "the dramatic levels some analysts had foreseen". Quoting figures from the International Stainless Steel Forum, Giuliani said European stainless steel production was expected to increase by 7.4 percent this year to 9.5 million metric tons.

Barry Hunter of US-based Hunter BenMet Assoc. talked of the stainless steel scrap market entering "uncharted waters" in terms of wholesale buying prices. "General knowledge of all available wholesale buying prices has allowed those willing to sell material into this highly-competitive wholesale market to basically dictate pricing for individual loads," he said.

Operating rates at the major US mills "are as close to 100 percent as production will permit" while order books appeared set to remain strong throughout the third quarter. "North American Stainless, perhaps our largest flat rolled stainless producer, has already announced tonnage allocations for customers on new orders," he noted.

Strong domestic demand and limited scrap availability had impacted on US exports, with shipments dropping 15 percent between the final quarter of 2005 and the first quarter of 2006. Furthermore, export volumes in February and March were, respectively, 30 percent and 35 percent lower than in January.

According to Ildar Neverov of TeplotovResource in Russia, an increase in domestic demand for stainless steel scrap over recent years could lead to a reduction in his company’s exports.

Stuart Freilich of United States based Universal Metal Corp., pointed to continuing strong demand for high-temperature alloys and titanium alloys, not least because major consumers were "scrambling to secure metal in order to increase their production rates of military and commercial aircraft". The ferro-titanium market had been "in the doldrums" during the third and fourth quarters of last year but was showing signs of renewed strong demand. This was helping to fuel an increase in ferro-titanium scrap prices.