UPTURN IN STAINLESS STEEL MARKET EXPECTED EARLY NEXT YEAR

Stainless steel prices are likely to slip further over the next few months. More production cuts are also envisaged for the rest of 2008. However, a revival in price and supply are anticipated early next year. The recovery is forecast to be modest but none the less significant after recent traumas.

Poor demand across the globe is, currently, providing the backdrop for weak sentiment in the nickel and chromium markets. Stocks of the former metal on the LME remain at high levels. In fact, the price in week fourty this year fell to near $US8,800 per tonne – its lowest point for more than five years.

These depressed nickel values will push alloy surcharges down further over the next two months in the US and EU. Moreover, transaction values for the 300 series products will also drift downwards in Asia. To counter the price reductions, steelmakers across the world are making savage cuts in output.

Mill order books are poor as customers refuse to build inventories – sensing lower selling figures in the near term. Demand for nickel and chrome will, therefore stay depressed for the remainder of the year. There is, however, light at the end of the tunnel. Despite weak demand in the short term, the mill output curbs should soon bring supply and demand nearer into balance. This should encourage a degree of inventory building early in the New Year.

It is probable that the $US8,800 per tonne level for nickel will be close to the floor for this cycle – albeit it is possible that the figure could be breached in the short term. We do, however, anticipate a mini revival in the cash figure for nickel around the turn of the year. This should trigger a turnaround in buyer attitudes to rebuilding inventories. The global market should then improve in price and supply but the upswing is likely to be much less dramatic than those seen in recent times.

Source: MEPS - Stainless Steel Review - click here for a free sample copy.

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