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Stainless Steel Coil Suppliers Hope For Recovery in 2019

Date: 2018-12-24
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Stainless steel prices – in particular, those for strip mill products – demonstrated diverse trends, in the traditional steelmaking regions, in 2018.

In the United States, the implementation of Section 232 quotas and tariffs, early in 2018, had an immediate inflationary effect on stainless steel coil selling figures. Basis values for grade 304 cold rolled coils declined during the latter part of the year - as did alloy surcharges. However, they remain slightly higher than they were at the beginning of 2018. Furthermore, North American transaction prices will finish the year above the values recorded in January, while those in Europe and Asia, generally, are down.

In Europe, as alloy surcharges soared, between February and July, transaction values failed to keep pace. Buyers were reluctant to pay the full extent of the increases. The majority of business, consequently, was carried out using “effective prices,” rather than the established “basis plus alloy surcharge” mechanism. During this period, nominal basis figures, i.e., transaction value minus alloy surcharge, dropped to unfamiliar and, almost certainly, unsustainable levels.

The widespread belief was that, when alloy surcharges receded, effective prices would decline less steeply, and that nominal basis values would, therefore climb back towards “normal” figures. In fact, during the second half of 2018, transaction values have fallen by more than the decrease in alloy extras. Nominal basis numbers are, now, several hundred euros below the widely accepted breakeven figure for cold rolled coil production. European producers will be hoping for a substantial recovery in stainless steel flat products prices, to return their operations towards profitability.

Asian prices have been much less volatile, this year, than those elsewhere in the world. Typically, fluctuations in their selling figures are driven by variations in raw material costs. Recently, producers attempted to maintain stability in their local markets by minimising price alterations. In Japan, especially, only moderate changes in market values, for 300-series cold rolled coils, were recorded, in 2018.

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