Steel demand weaker

Demand for stainless steel has contracted in many regions with economies hit by raised interest rates, tighter credit lines and consumers’ reduced purchasing power, according to scrap specialists.

The latest Mirror on the stainless steel sector from the Bureau of International Recycling charts ‘a significant slowdown’ in all but a few Asian countries. Writing in the Mirror, Joost van Kleef, chairman of BIR’s stainless steel and special alloys committee, reports that major mills in Europe are reacting to the drop in stainless demand by reducing crude stainless production for the third quarter, with some implementing temporary lay-off schemes.

Inflation declining

‘In this environment, the strong pressure felt a year ago from imported finished stainless from the Far East has been reduced,’ says van Kleef. ‘Although scrap demand also softened, availability has tightened significantly on the back of less new scrap entering the supply chain and lower trading activity.’ 

The report adds that at the start of the third quarter, ferrous scrap and molybdenum prices were moving sideways while ferro-chrome felt significant downward pressure. Despite a major surplus of primary nickel such as nickel pig iron looming over the segment, LME nickel prices remain elevated with support from low stocks of Class I materials.

‘Looking ahead, there is low visibility towards the end of the summer period,’ concludes van Kleef. ‘But, with inflation declining, expectations are that major central banks will end their rate hike cycle in the autumn. Maybe this is what we have to look forward to.’

Asia pressure

The Asian perspective comes from fellow committee members Vegas Yang of HSKU Raw Material and Mahiar R Patel of Cronimet who say there is much uncertainty with companies and economies under pressure.

‘Asia’s stainless sector ended the second quarter with lacklustre demand,’ they report. ‘Going into quarter three, demand for stainless steel scrap seems weak; scrap volumes from manufacturing activities have slowed and only post-consumer scrap is flowing freely.

In the second quarter, Taiwanese mills’ demand for stainless scrap was at a low level. Approximately 70 000 tonnes per month of Indonesian hot coil and 5 000 tonnes per month of nickel pig iron are flooding into Taiwan, they add, with one positive being that Taiwanese mills are now using up to 80% scrap in their melts.

US markets

Another committee member, Doug Kramer of Spectrum Alloys, notes the US picture of slower manufacturing output, commodity price volatility and rising interest rates confronting recyclers in the USA. 

‘The latest PMI reading of 46.0 for June indicates a continued contraction in US manufacturing output,’ he writes. ‘According to market participants, new orders for manufactured goods are now getting pushed back into 2024 while hiring and retaining workers remain a major struggle.

‘For US steel mills, the American Iron and Steel Institute reports the capacity utilisation rate has been hovering around 78% of late, down from more than 80% this time last year. Meanwhile, steel sheet and recycled steel prices have been pressured into heading lower over recent months.’