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EU stainless supply issues continue as strikes persist

Stainless steel supply issues caused by ongoing industrial action continues to dominate market discussions in Europe, despite having only a limited impact on material availability so far.
  • The below insight into European stainless steel sector’s current supply challenges first appeared in the March edition of MEPS International’s Stainless Steel Review. Click here to explore subscription options. 

On March 11, Outokumpu advised its customers that, due to political strikes in Finland, the Tornio port and the majority of its stainless steel and ferrochrome operations would be shut down for 14 days. Shipments from Tornio are affected. Outokumpu said the action would also create delays to the company’s operations in other countries as a result of disruptions to internal material flows in both Europe and Americas. The Finnish labour unions subsequently announced that the strike action would be extended until March 31 (before a further extension to April 8). 

In addition, Acerinox workers at the Los Barrios plant in Cadiz, Spain, entered a seventh week of strike action as March’s Stainless Steel Review was published. They have been unable to reach agreements on several key issues including salary revision, production bonuses, flexibility, partial retirements and promotions. Several MEPS respondents indicated that a resolution was unlikely before the Easter holidays (talks on March 27 failed to bring an end to the dispute).  

Sufficient inventories ease pressure 

In March, the majority of MEPS respondents were still confident that they had large enough inventories to overcome the current supply disruptions, at the current level of demand. Some suggested shortages could develop in the more speciality grades and sizes in the upcoming months.   

Many buyers are now being offered May and June deliveries for new production orders, regardless of the mill. However, most are not too concerned about the extending delivery lead times as they either have sufficient inventories or can fill any stock gaps from within the market. Some buyers reported distributor prices of EUR2,650 per tonne for 304 cold rolled sheet in Germany and Italy. 

The MEPS European average transaction values for 304 and 316 hot and cold rolled coil increased in March, as a result of the supply disruptions at Acerinox and Outokumpu. Nevertheless, the main issue reported by distributors was that, due to low demand, they are still struggling to pass on any rises to their customers. Margins continue to be squeezed. 

Buyers resume Taiwanese and Turkish imports 

Low margin prospects on locally produced material, combined with delivery delays on existing orders and extending lead times on new production, have renewed the appeal of imports. 

Several buyers were confident enough to place orders with Taiwanese and Turkish steelmakers listed among exemptions from the proposed duties on Indonesia-origin material outlined by the European Commission. This is despite the investigation’s findings being provisional. The Commission’s final recommendations are expected in May. 

Import offers increased in March, due to a rise in nickel prices, but still present buyers with a saving when compared with European mills’ prices. Consequently, it is likely that uptake of the EU safeguard measures’ quotas for Taiwan and Turkey will be greater in quarter three than in previous quarters.