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Stainless steel markets set for further decline in coming weeks

A further decline in stainless steel markets is expected in the run-up to the Northern Hemisphere’s seasonally slow summer period following a marked price fall so far during the second quarter, according to the International Recycling Bureau’s Stainless Steel and Special Alloys World Mirror quarterly report, released May 12.

A downturn in demand and prices is being witnessed in all major market areas except the Middle East, where prospects are for growth, reported BIR’s regional stainless representatives. Concerns on inflation are seen persisting into Q3, even though falling energy prices during 2023 significantly reduced the cost basis for energy-intensive stainless steel production, they said.

“The sales market for stainless steel is getting more challenging: after a short period of consolidation, prices for standard-quality stainless steel began to decrease and this trend has continued strongly during Q2,” said Joost Van Kleef of Europe-based raw materials trader Oryx Stainless BV, and chairman of the BIR Stainless Steel & Special Alloys Committee.

Structural market changes are underway in the European Union, where sustainability and ESG considerations will make it increasingly difficult to import nickel pig iron-based stainless steel, according to Van Kleef.

“These days, end-customers understand to a much higher degree the advantages of scrap-based product produced in Europe,” Van Kleef said. “Prices remain under pressure for most raw materials—including nickel, molybdenum, and ferrous scrap.”

Throughout Asia, stainless mills ended Q1 with weak order books for end products in an uncertain business environment, Vegas Yang of HSKU Raw Material Ltd, Taiwan, and Mahiar R. Patel, of Cronimet in Singapore, wrote in the bulletin. “With a fading impact on demand expectations from China’s reopening, mills around Asia needed to reduce their intake of stainless scrap, owing to weak sentiment among coil centers and consumers,” they said.

South Korea’s Posco, a major stainless steel producer, has restarted smelting operations at all furnaces and re-entered the international market in Q1 and Q2, albeit with below-average tonnages, the industry representatives said.

Taiwanese mills’ stainless steel scrap orders in April and May were 30% below normal levels owing to increased volumes of Indonesian hot coil and nickel pig iron imports, they said. In China, demand for stainless scrap has declined substantially since mid-April, “as expectations of an uptick in the country’s stainless demand did not materialize.”

BIR US representative Doug Kramer of Spectrum Alloys LLC cited analysts as saying that following Q1’s depressed levels, stainless steel output is not expected to recover until H2 amid excess nickel pig iron inventories in China and loss-making operations in both China and Indonesia.

Global stainless steel melt shop production declined 5.2% last year to 55.26 million mt, including a drop of 14.8% in the US, according to worldstainless.

Ruggero Ricco of Italian stainless steel supplier Nichel Leghe Spa said that almost all stainless steel mills in the country are implementing production shutdown periods, amid a lack of orders and in an attempt to significantly reduce the purchase price of scrap.

Omar Al Sharif of Sharif Metals Group DMCC reported the stainless steel and nickel industry in the Middle East is poised for growth because of the large number of mega-projects underway or planned in the region, particularly in Saudi Arabia and the United Arab Emirates, and particularly for pipes.

To ensure supplies of raw materials, the UAE’s Ministry of Economy has extended its ban on ferrous scrap exports, including stainless steel, until Sept. 21.

Author Diana Kinch