Shortages continue to disrupt US stainless steel market

Inventory levels across the US stainless steel sector are extraordinarily low. While steel usage rebounded quickly following the pandemic-induced slump, steel production resumed at a much more gradual pace. This resulted in a substantial imbalance between supply and demand developing in the market. Buyers report that, in several grades and sizes of stainless steel flat products, no material is available in the United States.

US producers, Outokumpu and North American Stainless, have struggled to match output with demand. Purchasing managers are now placing orders for deliveries in the final few months of this year. The strikes at ATI’s facilities added further pressure to the already stretched supply chains. Deliveries are, at least, several weeks late, from domestic suppliers.

Market participants report that the unprecedented conditions have led one US mill to renege on contracts, with certain customers, for orders due between July and September. The force majeure declaration from NAS caused additional panic, albeit only for a few days, as it was quickly revoked.

Many service centres and distributors are, reportedly, left with no incoming material until later in the year. With exceptionally limited options available domestically, several buyers have started purchasing volumes from overseas suppliers. However, imports are hampered by poor container availability and high shipping costs.

The severe shortage of material in the market continues to drive prices upwards. Since the beginning of 2021, US stainless producers have made a number of reductions to the discounts to their list prices, for cold rolled material. Consequently, US cold rolled 304 and 316 basis values have increased by more than 20 percent since January, this year. In addition, upward adjustments have been made to the mills’ price extras.

Demand in the second half of 2021 is expected to stay strong, and material will remain difficult to source domestically. The next few months are likely to be extremely challenging for many US buyers. Further increases in basis values are predicted during the third quarter. Stainless steel prices are forecast to remain high for the remainder of 2021.