Stainless steel markets in ‘wait and see’ mode as September approaches
Stainless steel markets are cautiously optimistic regarding demand in the remainder of 2020. A steady, month-on-month, increase in activity has been witnessed, following the easing of lockdown restrictions, in many countries. However, market participants acknowledge that it is unlikely that demand will return to pre-Covid-19 levels during the last few months of this year.
Rising nickel prices lifted input expenditure for most stainless steel producers, in recent months. The upward movement in nickel values is helping to bolster consumer sentiment. However, many buyers question its sustainability. This led to diverse stainless steel pricing trends across different geographical regions, in August.
In China, Taiwan and South Korea, steelmakers have been quick to pass on the rising nickel costs. This is despite reduced demand, resulting from the coronavirus pandemic and the rainy season. However, signs of an uptick in selling values are buoying confidence amongst buyers in Asia.
During the past few months, many traders and distributors purchased only for their immediate requirements. Nonetheless, steelmakers hope that an upward price direction may spur more restocking activity, in the near term.
Conversely, in Europe, market participants are encouraged by recent, albeit small, upticks in activity, across several end-user sectors. Short-term demand is relatively healthy, although many buyers remain cautious regarding future requirements.
It is believed that European stainless steel pricing has now reached the bottom of the current cycle. It is likely that producers will attempt to lift prices from September onwards. This would be supported by ongoing capacity constraints at the steelmakers.
Import offers are becoming less attractive due to the EC safeguarding quota constraints. In addition, several Asian suppliers have increased offer prices, making them uncompetitive to EU buyers.
The US market continues to grapple with the impact of Covid-19 infection rates. A slight uptick in activity was noted, in August, but overall demand remains at a low level. As a result, discount levels from the US mills remained unchanged, this month.
Several market participants are optimistic regarding an improved rate of recovery following the US presidential elections in early November.