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Engineering Industry Reports and Surveys
News Release from: MEPS (International)
Edited by the Engineeringtalk Editorial
Team on 02 August 2005
Oversupply causes falls in stainless
prices
Summer holidays in the northern hemisphere, high stocks and the weakening of raw material prices are combining to send stainless steel markets into the doldrums, says MEPS Stainless Steel Review.
Summer holidays in the northern hemisphere, high stocks and the weakening of raw material prices are combining to send stainless steel markets into the doldrums Many producers have announced output cuts in an effort to bring the market back into balance
This article was originally published on Engineeringtalk on 4 Nov 2005 at 8.00am (UK)
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This has been made necessary by the excessive rate of production since mid 2004.
The resulting oversupply has caused falls in stainless prices.
Mills have therefore been trying to steady the market by announcing cutbacks in production.
In Europe, ThyssenKrupp Stainless, Ugine and ALZ and Outokumpu have each said they are reducing output - though in the case of the Finnish company it is not clear to what extent cuts at its Swedish works will be offset by the ramp-up of its new melting shop at Tornio in Finland.
In Asia likewise, stainless mills in Taiwan, Korea and Japan are reducing their operating rates, citing the need to bring down stock levels.
Even Chinese cold rolled stainless producers are reining back their production.
So far these cuts have not had much effect on prices and neither are developments in the all-important alloy costs helping the mills to fill their order books.
The average LME settlement price for nickel in June was US $16,159 per tonne - down by about 5% from May.
Barring an upsurge in the last few days of July, the average price is certain to be much lower than this, because nickel has been trading at less than US $15,000 per tonne for most of the month.
In addition, ferro-chrome is being sold in the third quarter at around US $0.78 per pound - down from US $0.83-0.84 in period two.
These lower prices for alloys, together with declining costs of unalloyed scrap, will result in falling surcharges for stainless buyers.
In North America, some of these reductions are already showing through in surcharges for August, which for type 304 are down by about 9% from July.
The further cost decreases will result in markedly reduced surcharges from September and will spread to Europe too.
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