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Home > MEPS Steel News - 02.03.2015


Stainless steel purchase tonnages have failed to pick up, in early 2015, in the major consuming markets. Although there was a burst of activity in the first half of January, this appears to have been the result of short-lived stock replenishment measures, which have now subsided.

The consensus view amongst market participants in the traditional stainless steel producing regions is that this year is likely to be only slightly better, in terms of sales volumes or prices, than 2014. Many believed, though, that something resembling a traditional first quarter upswing might materialise. However, demand has been disappointing and transaction values have followed raw material costs in a downward direction.

There are many factors contributing to the current lack of demand. Most of these result in caution on the part of buyers. The recent negative trend in raw material values, especially nickel, has, inevitably, made customers reluctant to commit to purchases, in case the bottom of the price cycle has not been reached.

Broader economic and political issues are also in play. The turmoil in the eurozone following the election of an anti-austerity government in Greece has led to uncertainty and negative sentiment in the region. There are further concerns that other debt-ridden countries may seek to renegotiate their repayment arrangements.

A knock-on effect of the strife in the region has been the weakening of the euro against other major currencies. While this has made exports from the eurozone more competitive, it has made some raw materials more expensive for European producers. A quirky outcome of this exchange rate movement is that, while most metals prices have been reducing, in US dollar terms, the European stainless steel makers’ alloy surcharges will increase, from February to March.

The rebuilding of confidence in stainless steel markets in the short to medium term is largely dependent on the outlook for nickel. At present, the pure nickel supply remains in surplus and LME inventories continue to record all-time highs. The predicted turnaround in the supply/demand balance has been delayed by the ability of Chinese nickel pig iron producers to eke out their stocks of Indonesian laterite ore by blending it with lower-nickel ore from the Philippines. Until Chinese stainless steel producers’ requirements for refined nickel increase, a sustained upturn in nickel prices is unlikely.

Source: MEPS - Stainless Steel Review - February Issue

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