MEPS forecasts 2024 EU stainless steel market recovery

MEPS senior consultant Kaye Ayub told attendees at this week’s British Stainless Steel Association (BSSA) annual conference to expect a European stainless steel market recovery in 2024. 

Addressing the conference at The Grand Hotel Birmingham, she told delegates the market was likely to recover next year following a period of faltering demand and reduced raw material costs expected to keep prices subdued for the next 12 months.  

“Although stainless steel prices are expected to be influenced by the movements in raw material costs, supply and demand will have a larger impact on transaction values, during the next twelve months”, said Kaye. 

“Demand and imports will be down this year, but the market should recover next year, along with prices.” 

Also among the speakers at the event, hosted by BSSA managing director Rob Cooper, were: Max Menzel, Outokumpu’s head of sustainability and technical customer service; Jason Franks, UK Metals Expo; and David Wilkinson from the UK Government’s Department for Business and Trade. 

Menzel highlighted some of the challenges associated with Outokumpu’s target of achieving carbon neutrality by 2050 in his presentation. He said that half of the CO2 emissions related to its stainless steel production resulted from the provision of mined base products. 

Outokumpu claims that the recycling content of its stainless steel is now more than 85%, higher than any other producer in the industry, however. 

Declining raw material costs 

Ferrous scrap is among the raw materials that are currently reducing in price amid reduced demand for steel. 

Kaye described how the decline has seen a dramatic dip in the cost of scrap as a proportion of alloy surcharges now seemingly abandoned by many EU mills.  

The shift to all-inclusive effective prices also reflects the volatility of nickel prices. This is due, in part, to growing nickel supply and its reduced liquidity on the LME following the temporary suspension of trading in March last year. 

Ferrochrome prices have also come off their recent highs, although spot values have started to move up again in China of late, while molybdenum prices appear to be settling around USD46 per kilogramme. 

Kaye said that these raw material prices would combine with reduced gas costs in the EU to maintain low prices. 

However, high inflation and rising interest rates are affecting demand. The EU’s largest economic power, Germany, entered recession this week. Its economy was hard hit by the sanctions on Russian gas. 

The UK is expected to be one of the weaker European economies. However, it is believed that a recession will be avoided.   

Recovery hopes 

Kaye said the Eurozone manufacturing PMI was below expectations in May. It remained well below 50, indicating a deepening of the contraction in the manufacturing sector.   

She added: “The negative outlook for GDP and the declining sentiment in the manufacturing sector suggests that the demand for stainless steel will be down this year. However, we do anticipate a recovery in the European stainless steel market in 2024.” 

As reported earlier by MEPS, Kaye expressed concern that a cycle in which anticipation of falling prices in the market result in buyers delaying new orders. She described this as often being “a self-fulfilling prophecy”, with fewer orders resulting in lower mill order books and shortening lead times. This usually leads to further price cuts, she said. 

Confidence remains that demand, and the wider steel sector, will strengthen towards the end of Q3 and into next year, however. 

Addressing the BSSA conference, Kaye said: “Reductions in energy costs, and signs that peak inflation have already been reached, should boost market confidence later in the year and into 2024.” 

For further insight into stainless steel prices, and wider market trends, contact MEPS to gain access to its monthly Stainless Steel Review.