Stainless buyers cautious amid nickel price volatility

31st January 2022

Recent nickel price volatility is making European stainless steel market participants nervous – especially at a time when many fear that a price reversal is on the horizon. In addition, demand for stainless steel was slow to materialise, in the first few weeks of January.

Nevertheless, domestic supply of several products, most significantly cold rolled coil and sheet, remains tight. Consequently, many buyers remain compelled to secure material, as local delivery lead times for new production now extend into the second half of this year.

Home market supply constraints for cold rolled coil and sheet, combined with attractive import offers, has led to another quarter in which the EC safeguard quotas for Taiwan and Turkey were rapidly exhausted.

The India allowance for stainless steel bars was also fully utilised within the first few days of January. Nonetheless, several buyers report that they would take the material and pay any necessary duties, whilst others will wait until the April quota opens.

Despite the safeguard remedies, Asian-origin import offers are currently much less expensive than procuring the material domestically. A number of buyers report that the majority of the Asian price offers they receive, for 304 cold rolled coil, are below €4,000 per tonne, including tariffs. This equates to a differential of around €300/400 per tonne between import and domestic values. Several market participants suggest that this is more than double the normal price gap.

Meanwhile, the cost advantage for ordering tonnages of stainless long products, from India, has widened substantially, following the introduction of energy surcharges, by European producers.

Chinese mills lift prices

Chinese steelmakers have been making attempts to adjust their price offers, to reflect the jump in nickel values, ahead of the upcoming New Year celebration shutdowns. Stainless steel producers in several Asian markets temporarily withdrew their quotations while they evaluated the price situation for raw materials. New offers are likely to be higher but remain competitive in Europe.

The LME cash nickel price reached its highest point in more than a decade on January 21, as inventories continued to slide. Stocks in LME-registered warehouses have fallen to historically low levels, due to tight supply and good demand, especially from electric vehicle manufacturers.

After reaching a peak of around US$24,000 per tonne on January 21, nickel values fell back to just above US$22,500 per tonne, in the following days. This was partly due to concerns that Tsingshan Indonesia could flood the markets with battery grade nickel. However, prices have partially recovered as those fears eased.

Nickel prices are likely to remain high, in the near term. Consequently, European alloy surcharges are expected to increase, month-on-month, in March.

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