BUSY SUMMER MAY SIGNAL
UPTURN IN STAINLESS STEEL MARKET - MEPS
September is traditionally a month that marks
a seasonal upturn in the stainless steel market cycle. As producers
and consumers return from a period of low activity, resulting from
the summer holidays, stockists and end-users rebuild their
inventories. The consequent uptick in demand puts upward pressure on
prices. This, in turn, leads to speculative purchasing as buyers
anticipate a positive price trend lasting several months.
That’s how it used to be. In recent years, though, the pattern has
been less predictable. Since the global financial crisis, businesses
throughout the supply chain are reluctant to hold stock. Credit is
more difficult to obtain. Competition and oversupply have increased.
Continuing weak demand and the long-term downtrend in nickel values
have made it very risky to buy more material than is necessary to
cover real orders.
As a result, the market has tended to remain quite flat. Neither
buying activity nor prices have increased, post-summer, as much as
they were expected to do, pre-crisis.
This year, however, there has been a subtle change. Many supply
chain participants reported unexpectedly high activity levels during
the traditionally slow summer months. Producers in many countries
have introduced price hikes that do not merely reflect changes in
input costs. These increases have not been universally accepted, as
yet, but the indications are that most market players are supportive
of this direction.
The justification for these moves is that the mills have been
unprofitable for too long and that they need higher selling values
to cover their production costs. It could be argued that this has
been the case for a long time. Therefore, we must ask whether it is
significant that this is happening now.
Western economies, in particular, have been “bumping along the
bottom” for some time. However, in recent months, positive GDP
growth figures and improved forecasts have been reported in several
MEPS are, certainly, not so brave as to “call the recovery”, here
and now. MEPS does, however, predict a steady, upward trend in
global stainless steel transaction values during the next six
Source: MEPS -
Free Sample copy
Stainless Steel Review
up for free MEPS steel news alerts