EU stainless CR coil prices climb as supply tightens

30th November 2021

Stainless steel market participants remain cautiously optimistic regarding demand in 2022. This is despite a steady, month-on-month, slowdown in activity since the end of the summer period. As the year-end approaches, many buyers are purchasing only for their immediate requirements.

Procurement is being restricted by company credit limits and cash flow problems. With stainless steel prices having more than doubled in the past twelve months, buyers are able to purchase only half the tonnages that they would have previously been able to obtain, with the same credit facility.

On the supply side, small pockets of domestic hot rolled capacity are still offered for December production. Import opportunities are also available.

Conversely, buyers remark that securing deliveries of cold rolled flat products remains especially challenging. Service centres report difficulties in obtaining quotations from some producers. Those mills that are providing offers are now accepting orders for April/June delivery.

The recent fire at Marcegaglia’s plant has further tightened supply across the region. Customers have been informed that it will take many months to reinstate the line. It may be the middle of 2022 before they start to receive their outstanding material.

Mill delivery performance, generally, remains poor. Market participants report that steelmakers are postponing orders, previously scheduled for December dispatch, into the new year, amid overbooked rolling programmes. One producer is also, reportedly, reducing its customers’ tonnage allocations by up to 50 percent, for the second quarter.

Import volumes exceed quotas

Imports of stainless steel flat products continue to be restricted by the EC safeguard quotas. Nevertheless, buyers report that significant volumes are already stored at the ports to be customs cleared at the start of 2022. Several quotas are likely to be utilised immediately on January 1. Consequently, excess material is expected to be held until the following quarter’s allocation opens in April.

In addition to the existing safeguards, consumers are faced with an increasing number of antidumping and countervailing duties. In recent days, the European Commission ratified antidumping measures relating to imports of cold rolled stainless steel flat products from both Indian and Indonesian steelmakers.

The supply shortages of stainless cold rolled coils and sheets, in Europe, continue to drive up local prices. Basis values vary between steelmakers and are dependent on the month of production agreed. For example, the price of 304 cold rolled coil, booked in November for future delivery, ranged between €1750 and €1920 per tonne. A small number of buyers reported receiving offers of up to €2000 per tonne.

However, inventory levels are improving, in most grades and sizes of material. This, combined with a softening in demand, is likely to restrict the rate of price increases that buyers are willing to accept in the coming months.

Outokumpu’s published alloy surcharge for grade 304 stainless steel flat products will increase by €121 per tonne, in December. This is due to an upturn in the cost of nickel and ferrous scrap, during the reference period. The MEPS Europe average 304 cold rolled coil basis value is now equal to the all-time high, witnessed in January 2007. That record figure will, almost certainly, be surpassed in December, as prices are forecast to rise.

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