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High nickel costs pose threat to stainless steel

A MEPS (International) product story
Edited by the Engineeringtalk editorial team Nov 7, 2003

Far from declining since Inco resumed production after a lengthy strike at its Sudbury operation in Canada, the price of nickel has gone from strength to strength, says a new review from MEPS.

Far from declining since Inco resumed production after a lengthy strike at its Sudbury operation in Canada, the price of nickel has gone from strength to strength.

Whether it is driven by the activities of financial speculators, by a shortfall in physical supply or by some other factor, the price shows few signs of coming back down below US $10,000 in the short term.

It is a far cry from a year ago, when the price was around the US $7000 mark.

For stainless-steel suppliers this has several consequences.

Mills with an established alloy surcharge system in place are doing better than those who have to negotiate with their customers each time nickel surges to new heights.

MEPS believes some big producers in Asia, for example, are struggling to make a profit - even with the strength of stainless demand there - because of their rising raw material costs.

The explosion in nickel prices is beginning to take its toll on some areas of stainless-steel consumption.

There is considerable debate about the extent to which high prices could choke off growth in stainless demand over the medium term.

Many end-users are accustomed to fluctuating prices but the strength of nickel is prompting them to look for alternatives - often low nickel or nickel free grades but the biggest threat could come from non-steel materials.

In many cases type 430 will do the job of type 304.

The 200 series is getting a fresh work out, notably in Asia.

Some stainless-steel mills are known to be so concerned that they have launched new research projects to develop low-nickel alternatives to 300 series materials.

High carbon chromium/manganese alloys are being subjected to scrutiny to assess the extent to which they could supplant nickel grades.

If such efforts achieve the hoped for success, then in the medium term some of the market could be lost to nickel bearing grades permanently.

There are already signs of ferritic production advancing at the expense of austenitic.

This will only ease the problem, not remove it entirely.

Stainless demand growth of 5 to 6% per year will soon catch up any lost tonnage.

And while austenitic grades may fall (as some have predicted) to as little as 50% of the overall stainless market, that is still an awful lot of nickel.

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