Stainless Steel Prices on the Rise

MEPS STEEL NEWS
Stainless steel producers from Japan in the east to Kentucky in the west seem to have decided that they have had enough of falling prices and are acting to reverse the downward trend. The first few weeks of 2006 have seen a flurry of announcements of intended selling price rises.

It is quite unusual for producers in Asia, Europe and America to go for price hikes all at the same time. Three factors have prompted this unusual unanimity. First, price weakness has affected all major markets. Second, Chinese production of cold rolled stainless is lower than had been forecast – thus reducing fears of excess supply. Third, alloy costs are on the rise.

Between January and December last year, basis prices for grade 304 cold rolled stainless coil (excluding raw material surcharges) fell in many of the world’s principal markets. The drop was relatively minor in the US. However, in Europe the price went down by 25 percent.

Last year’s cuts in production seem to have brought a bit more balance to the supply-demand picture. We estimate that crude stainless output in the second half of last year slipped by at least 12 percent in Europe and the Americas. Output also appears to have fallen in Asia, though more modestly.

The prospect of rising alloy surcharges next month has encouraged buyers to come back into the market to rebuild their depleted stocks. Mills, therefore, seized the opportunity. Among the first to move was Arcelor’s subsidiary Ugine & ALZ, which is proposing a €50 per tonne basis price increase from February and another €50 per tonne rise in March. Other European mills are following a similar line.

In the Americas it was NAS which led the upward move – announcing plans to raise basis prices by about 3 percent effective March 1. This is the first such attempt in 18 months, and was followed by other major producers.

In Europe and America the mills will have the challenge of pushing through basis price hikes at the same time as alloy surcharges are rising. This is a practical proposition if the cost of nickel continues to increase for several months. However, this latest order burst could be short lived if nickel prices start to retreat once again

This entry was posted in Nickel. Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *