DISAPPOINTING PROSPECTS FOR STAINLESS
STEEL DEMAND GROWTH IN 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 -
Review - February Issue
Free Sample copy
Stainless Steel Review
up for free MEPS steel news alerts