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Global Stainless Steel Price Upturn Anticipated

Date: 2019-04-08
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Rising raw material costs have combined with traditional, seasonal factors to provide expectations for a strong recovery in stainless steel prices during the second trimester of 2019. LME nickel costs followed an upward trend from the beginning of January until early March.


Market participants, correctly, predicted a rise in the European ferrochrome contract, in the second quarter. Consequently, suppliers were encouraged to push for an uplift in nominal basis prices. In February, most ex-mill transaction values, for 300-series coils, rose by more than the hike in alloy extras. This introduced the hope, among producers, that basis figures would begin to recover to a level that would represent profitable operations, for the mills.

In March 2019, European alloy surcharges, for austenitic flat products, increased, substantially, after falling consistently since the last peak figure, in July 2018. Regional mills proposed further increments to nominal basis values. However, in a climate of moderate demand, buyers consider that the latest rise in alloy extras is as much as the market could withstand.

Nickel values softened, after reaching a high point in early March. As a result, the recently published alloy surcharges for April represent a less dramatic increase than was recorded in the previous month. In this environment, European mills will continue to seek increased nominal basis prices. MEPS believes that they will achieve modest success, in this endeavour.

In the United States, the leading producer, North American Stainless, announced basis price hikes for austenitic hot rolled plate and round bars, effective from April 1. Given the producer’s powerful position in the market, these proposals are receiving little resistance. Conversely, in the hot and cold rolled coil sector, steep rises in alloy surcharges were offset by mediocre demand. As a consequence, basis values softened, in March. With further increases to alloy extras published for April – and forecast for May – US producers are likely to find difficulties in lifting basis prices, in the near term.

In the Far East, small rises were recorded, for 300-series coil values. The growing raw material costs were tempered by subdued demand, high inventory levels and excess production capacity. The Tsingshan plant, in Indonesia, continues to expand material availability, and apply downward pressure to prices, in the region. MEPS predicts further marginal increases in Asian selling figures, in the coming months. 


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