US stainless coil prices near bottom of cycle

Hot and cold rolled stainless steel coil prices in the United States will continue to move down with the mills’ published alloy surcharges in September. 

No official announcements of base price movements are expected in the near future, as producers doubt it would trigger any extra buying activity in the current conditions. Consequently, the MEPS US transaction value for grade 304 cold rolled coil is expected to fall to USD3,270 per tonne, next month – a 40-month low. 

The grade 316 alloy surcharge is set to decrease by USD177 per tonne, meanwhile, pushing the cold rolled coil transaction price below USD5,000 for the first time since March. It is believed that selling values for 300-series material are approaching the bottom of the current cycle. 

The majority of MEPS respondents in the US reported a slowdown in purchasing activity in August. Buyers remain reluctant to build inventories as uncertainty continues to cloud the outlook for the remainder of the year. The downward price trend is further discouraging distributors from buying, as they wait for prices to reach their lowest point. 

US mills’ delivery lead times are short. Consequently, buyers can afford to wait before making purchasing decisions. Inventories are adequate, and material can be sourced from within the market at prices lower than mill replacement costs. 

September is typically a strong month for the US steel market as activity resumes after the summer slowdown. Additionally, a 0.25% interest rate cut is expected to be announced by the Federal Reserve. Market participants are hopeful that this, along with the start of the annual contract negotiation season in October, will help to boost demand in the final months of the year, despite uncertainty surrounding the outcome of the upcoming US presidential election.

Defence and aerospace provide optimism for bar market

MEPS respondents in the United States are optimistic that demand for stainless steel bar could increase in September after steadily slowing throughout the first seven months of 2024. 

Demand for specialist grades remains healthy, with strong sales to the defence and aerospace sectors. Delivery lead times are gradually reducing but remain long compared with those for commodity grade material. 

Inventories throughout the supply chain have been streamlined during the past six months, in response to the modest level of demand. Uncertainty, due to factors such as fuel prices, overseas conflicts and the upcoming US presidential election, will continue to discourage supply chain participants from stock replenishment. 

Base prices for commodity grade bars remain unchanged. Alloy surcharges for grade 304 and 316 material have fallen in July and August and will decrease further in September.