Excess Production Capacity Undermines Stainless Steel Prices
Stainless steel prices continue to show few signs of
recovery. Selling values, in Europe, have been below producers’ breakeven levels
since a collapse in transaction figures, and the widespread adoption of
effective pricing, in the summer of 2018.
Moderate increases, in excess of rises in alloy surcharges, were reported in the
early months of this year. Now, the prospect of falling raw material costs, in
combination with mediocre demand, is applying negative pressure to nominal basis
Transaction values are also softening in the Far East, where activity is
subdued, while production capacity continues to expand.
Section 232 action, in the United States, led to an immediate rise in domestic
stainless steel prices, when first introduced. Since then, however, transaction
values have fallen back to a level that is more in line with international
The European Commission’s safeguarding measures were planned to prevent a flood
of imports, in the wake of the US government’s actions, and have had little, if
any, effect in boosting local prices, in the EU.
Market participants might expect a pricing boost from the value of one of
stainless steel’s key raw materials, nickel. LME nickel stocks are at their
lowest point in more than six years. Furthermore, with demand for nickel
growing, due to expected consumption in the manufacture of batteries for
electric cars, a deficit in supply of the metal is predicted, in the coming
Commodity prices, however, are influenced by a complex range of factors, beyond
the market fundamentals for the particular material. It is in this context that
nickel values are, currently, quite becalmed.
The main negative factor affecting stainless steel selling values remains
production overcapacity. Producers in the established steelmaking regions have
struggled to fill their schedules, in recent years. Now, with substantial new
production capability coming on stream in countries including India, China, and
Indonesia, it is difficult for sellers to make the case for increasing prices.
Source: MEPS -
Stainless Steel Review - May 2019
Also See: EU -
Stainless Steel Price Table
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