Section 232 Action
Creates Ripples Throughout Stainless Steel Markets
Divergent trends have
emerged, in worldwide stainless steel markets, in the wake of the
United States government’s Section 232 deliberations. Acting on the
recommendations of the report arising from the investigation into
the effect of foreign-produced steel on US national security,
President Donald J. Trump announced a tariff of 25 percent, to be
applied to all steel imports into the United States, effective from
American stainless steel producers and distributors alike acted
swiftly, applying increases to their selling prices. While this can
be seen as taking advantage of the rising cost of material from
overseas competitors and a predicted tightness in the supply of
stainless steel, it was hoped that this move would discourage panic
buying and, to some extent, avert that shortage.
Agreements were soon made with many of the United States’ leading
trade partners, granting them exemption from the immediate
imposition of tariffs. However, in a number of instances, the action
is merely delayed, pending further negotiations. Consequently, US
customers and traders remain reluctant to place orders with
suppliers from certain countries, for fear that tariffs could be
re-imposed by the time material is delivered. In this environment,
it should be possible for local sellers to maintain their elevated
prices, in the near term.
In other regions, this development has raised the spectre of a glut
of stainless steel, as some producers lose their current outlets in
the United States. Market prices have weakened, accordingly.
In Europe, despite encouraging domestic sales volumes, in the early
part of this year, and a perception of strong underlying demand,
stainless steel flat product basis values slipped, in March. They
could decline further, in April.
Producers in South Korea were unable to secure, in March, the
increases that they thought were justified by earlier rises in raw
material costs. Now, LME nickel values are believed to have passed
their peak, for the current cycle, and Chinese stainless steel coil
market prices have been sliding, in recent weeks.
Source: MEPS -
Review - March 2018 Issue
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