European stainless supply chain disruption intensifies

30th April 2024

Stainless steel supply disruptions in Europe are expected to persist for the remainder of the second quarter before abating in the summer months.

Supply tightness can occur when end-user demand increases at a faster pace than supply. However, the present challenges are largely the result of strike action and delivery delays from several EU stainless mills. MEPS respondents continue to report no increase in end-user requirements for stainless flat rolled material.

The Spanish steelmaker, Acerinox, has been unable to produce or ship any material from its Cadiz site since February 5, due to ongoing industrial action. Several MEPS respondents suggested that some material was being shipped from its Columbus subsidiary in South Africa to fulfil outstanding end-user orders. Distributors and stockists, however, are having to wait until the strike action ends.

A number of buyers had been informed that the situation at Acerinox may be reaching a conclusion as the workers of the plant may be offered the opportunity to vote on the mediator’s proposal. However, the strike committee opposed this option, and the vote did not take place.

Despite efforts to resolve the conflict at Acerinox Europa, there are “no guarantees that it will be resolved in the short term” the company stated in an April 25 update. The steelmaker also confirmed that its Bahru Stainless site in Malaysia will cease production in the second quarter due to the current market situation.

Political strikes in Finland were suspended on April 7. Many purchasers confirmed that, although they had promptly started receiving material from Outokumpu’s Tornio site, most orders would be delayed by three to four weeks. Buyers remain concerned that if the negotiations fail, and the countrywide strikes are reinstated, their deliveries will be postponed further.

Europe’s other domestic mills are, consequently, under pressure. An increasing number of buyers are experiencing delivery delays and some report having experienced issues with the quality of delivered material.

Very little imported stainless steel is arriving at the European ports to help alleviate the effect of these domestic supply issues, due to the lack of overseas orders placed earlier this year. As a result, inventories across the region are falling and low stocks are being reported in some product lines.

Most respondents commented that activity increased this month but that this due to supply disruptions rather than a rise in end-user demand. Most buyers anticipate that the supply problems will ease in July, when much of the delayed tonnages should have been delivered and recently placed import orders have started to arrive.

Many respondents are concerned that the summer months may bring a rapid turnaround in the market, putting prices back under downward pressure.

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