Members Area
     
T: +44 (0)114 551 8170
E: ssas@bssa.org.uk

Nickel and Stainless Steel Market Analysi

Nickel Price Decline

Nickel prices experienced significant declines in June 2024, marking it as the worst-performing base metal of the month. Prices fell over 14%, and by early June, they had dropped more than 19% from their peak on May 20. This downward trend reflects an ongoing search for a new price bottom amidst bearish market conditions.

Stainless Steel Sector Challenges

The stainless steel sector mirrored the negative sentiment observed in the nickel market, facing oversupply and weak demand throughout June. Distributors and brokers reported a reluctance among buyers to increase inventories, resulting in substantial discounts. Despite this, mills maintained base prices, hoping for an eventual demand uptick linked to future Federal Reserve rate cuts and infrastructure projects.

Market Dynamics and Pricing

Although mills are not lowering base prices, buyers have substantial negotiating leverage, leading to significant discounts for large-volume purchases. Lead times for mills remained historically short but stable, suggesting that mills are managing capacity to balance the market despite weak demand.

Import Trends and Freight Rates

Interestingly, the U.S. saw a notable increase in cold rolled stainless steel imports despite weak domestic demand and higher freight rates. Import volumes rose nearly 65% from November 2023 to May 2024. This surge is puzzling given the global container freight rate index increase of 155% from December 2023 to May 2024, which typically reduces the cost advantage of imports.

Vietnamese Import Surge

Vietnam’s share of U.S. cold rolled stainless imports increased disproportionately in April and May 2024. Historically averaging 5.77%, Vietnam’s share jumped to 10.26% and 8.88% respectively during these months. This trend parallels similar movements in the carbon steel market and might indicate Chinese dumping efforts, where China routes exports through Vietnam to circumvent duties.

Chinese Market Influence

Chinese overcapacity remains a major issue, with Western countries, including the U.S., imposing protectionist measures against Chinese exports. Despite tariffs limiting direct Chinese imports to the U.S., China’s share has slightly increased. This marginal rise suggests that China’s weak domestic demand and economic challenges push it to export surplus material, affecting global prices negatively.

Conclusion

The stainless steel and nickel markets are navigating a period of significant uncertainty and bearish sentiment. Increased imports, particularly from Vietnam, suggest strategic shifts to bypass tariffs, while mills’ firm stance on base prices and short lead times indicate efforts to stabilize the market. As global economic conditions evolve, particularly with potential policy shifts from the Federal Reserve and changes in Chinese industrial strategy, these markets will likely continue to experience volatility.

Full story markets.businessinsider.com