UPTURN IN ALLOY
SURCHARGES WILL NOT KICKSTART STAINLESS STEEL MARKET
The London Metal Exchange
Nickel Cash price climbed by more than 17 percent between February
15 and March 11, this year, peaking at more than US$9000 per tonne,
softening and stabilising at around US$8600 per tonne. This will
have an inflationary effect on transaction values for nickel-bearing
stainless steel grades, in the near term.
The majority of the sharp increase occurred during the reference
period for April’s alloy surcharges, in the countries where such
extras apply. In Europe, for example, Outokumpu’s surcharge for
grade 304 flat products will rise by €42 per tonne, compared with
the March figure. This is the biggest month-on-month increase in
more than a year.
MEPS forecasts a further, more moderate increase in alloy extras,
for May. Historically, such an upturn in effective prices, after a
long, downward trend, would signal an increase in purchasing
activity, as buyers placed orders in anticipation of rising future
On this occasion, however, supply chain participants are not
expected to react in the traditional manner. Market observers do not
believe that the uptick in nickel values marks the beginning of a
prolonged upward curve. LME stocks – more than 430,000 tonnes, at
time of writing – remain close to the all-time high level.
Furthermore, mining and processing capacity continues to exceed the
current consumption of nickel.
Worldwide economic growth remains weak. Consequently, general demand
for stainless steel is mediocre, while specific, large-scale
consumers, like the oil and gas sector, have scaled down their
activities, due to the fall in prices for their products.
In summary, neither nickel nor stainless steel is expected to record
significant price advances in the next six months. As a result,
customers will continue to buy only for their immediate
Source: MEPS -
Review - March Issue
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