Stainless steel prices set to stay high
A
MEPS (International) product story
Edited by the Engineeringtalk editorial team
Oct 3, 2006
Current nickel prices suggest that alloy surcharges on stainless steel will remain at their current unprecedented high levels for at least two months.
Nickel prices are currently hovering around US $30,000 per tonne and this suggests that alloy surcharges on stainless steel will remain at their current unprecedented high levels for at least two months.
For type 304 flat products, surcharges in October will be in excess of Eur 1900 per tonne in Europe and more than US $2500 per short ton in the USA.
Alloy surcharges have risen by more than 150% since January.
The LME price of nickel has doubled since March, and there is much controversy about the reasons for this.
Users continue to claim that the nickel market is not under-supplied, and that the upsurge in prices is the result of speculation by financial investors.
It is true that LME nickel stocks have been extremely low.
And this tends to support the opinion of those who say there is a structural shortage.
The hike in nickel prices is increasing the supply of scrap onto the market.
World trade in stainless scrap has risen by more than 1 million tonnes over the last four years.
But so far this is not having a dampening effect on the price of nickel.
Record levels of stainless steel production have certainly helped keep the figures high.
Output of crude stainless in the first half of this year was almost 13.9 million tonnes - up by 6.5% year-on-year.
Intriguingly, figures from the International Stainless Steel Forum reveal that most of this increase took place in the second quarter of the year: output in April-June was 12.6% higher than in the same period a year earlier.
This is likely to have continued into the third quarter - as the nickel prices headed up from US $20,000 to $30,000 per tonne between June and August.
There may also have been some of double booking, with buyers anxious to secure material in advance of September and October when the extremely elevated alloy surcharges came into effect.
There is certainly a danger of the market over-heating.
Many of these duplicate orders may be cancelled.
If the nickel price shows any sign of weakness, stainless buyers will be encouraged to hold off from placing new orders in the expectation of surcharges falling.
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