WEAK MARKET FUNDAMENTALS
KEEP STAINLESS STEEL PRICES IN CHECK – MEPS INTERNATIONAL LTD
Stainless steel market activity remains
subdued, around the world. Prices are quite stable. Transaction
values, particularly for grade 304 material, edged upwards, in some
countries, this month, as a result of the increase in LME nickel
figures between April and May. Most European producers’ alloy
surcharges, for type 316 products, were reduced in June, as
molybdenum costs maintained their downward trend.
Consumption is sluggish, in all regions. On the positive side, car
makers continue to record strong sales, while there are signs of
increased building and construction activity in many developed
countries. Meanwhile, the persistently low oil price has led to
severely reduced investment in exploration projects. Sales volumes
to the general manufacturing sector are yet to show any indication
of the recovery that has been anticipated for some time. Speculators
are cautious, especially in Europe, as they await some resolution of
the Greek debt crisis.
Nevertheless, we have seen some small signs of encouragement. Basis
values for coil products are too low to be sustainable, in the long
term. Consequently, European producers have made clear their
requirement for better returns on material for delivery after the
summer vacation period. We have reports of some increases being
agreed by buyers, already, and there are indications of further
advances in the near future.
The medium-term outlook for nickel pricing is a matter on which
market observers are not universally agreed. Many had predicted
that, driven by the impact of the Indonesian ore export ban, global
supply would slip into deficit by the middle of 2015. The prospect
of this situation was expected to have an inflationary effect on
In fact, a combination of weaker than anticipated demand and the
utilisation of alternative raw material sources, by Chinese nickel
pig iron producers, kept supply in surplus. As a result, commodity
prices for the metal have been on a downward curve since the
beginning of the year.
Nonetheless, miners and market analysts alike believe that most of
the factors required for a supply deficit are falling into place.
Consequently, nickel values are forecast to increase, steadily, over
the coming twelve months.
Source: MEPS -
Review - June Issue
Free Sample copy
Stainless Steel Review
up for free MEPS steel news alerts