Asian stainless prices rise on supply concerns
Global stainless steel demand remained weak throughout the summer period. However, market sentiment in Asia has become more optimistic following the return to work after the Mid-Autumn Festival holidays, earlier this month.
Early in September, the LME nickel price started to climb following a ban on Russian material being sold into UK warehouses.
Despite weak stainless steel demand, nickel inventories continued to fall, helping to maintain the price rise.
Nickel values declined in recent days. However, Asian stainless steel producers are expected to attempt to increase their domestic selling prices, for October, amid supply concerns.
South Korea’s largest steelmaker, POSCO, sustained significant damage during Typhoon Hinnamnor.
It is reported that the stainless hot and cold rolling lines were severely affected by the flooding at the company’s Pohang site.
Although assessments are still being made, early indications suggest the plant is unlikely to return to full production before the end of the year.
In normal trading conditions, the removal of such a large volume of production from the market would be extremely disruptive for stainless buyers.
However, while some cancellations or postponements of customer orders are anticipated, this is unlikely to result in a supply crisis.
POSCO believes that the majority of distributors, locally and overseas, have sufficient inventories to withstand any significant impact.
Steelmakers in other regions also have capacity to absorb any extra requirements.
In other parts of the world, stainless producers are being compelled to idle capacity, amid high energy costs and slow sales.
In Europe and the US, inventories of hot and cold rolled flat products remain high.
Most buyers report that they have enough material to see them through until the end of the year, at least.
Therefore, many distributors suggest that additional production cuts are necessary to create a balance between supply and demand.