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BIR Stainless Steel & Special Alloys Mirror June 2012

Global – The following article is based on the latest Stainless Steel & Special Alloys World Mirror produced by the BIR world recycling organisation for the benefit of its members.

In general, business in the stainless steel sector has continued to be conducted on a short-term basis over recent months – but demand for scrap has been ‘€˜good’€™ at a time when availability has declined owing to a combination of low nickel prices and reduced industrial production, according to Michael Wright, Chairman of the BIR Stainless Steel & Special Alloys Committee. However, the outlook for the third quarter is ‘€˜unclear’€™ given the imminent holiday period and ‘€˜a general fall in demand’€™.

Global stainless steel production is expected to climb 3-4% this year – similar to the increase recorded in 2011 – to around 33.3 million tonnes; growth rates of 7-10% are anticipated for China and India whereas stagnation or marginal increases are predicted for all other producer areas. For the moment, major stainless mills in China are running at 80-90% of capacity and total melting is expected to increase by 1 million tonnes or 7.5% this year and by a further 1.3 million tonnes or 8.5% in 2013; domestic scrap supply is good and ratios are typically 10-20%. A sluggish market has cut capacity utilisation rates at stainless mills in India to around 70% while imports have also weakened. ‘€˜Mills are buying on a hand-to-mouth basis, leading to a slow second quarter,’€™ it is noted.

The nickel price will depend on primary production, with an oversupply forecast for 2012 mainly due to nickel pig iron production in China. In this context, Indonesia has threatened to ban exports of nickel ore until domestic conversion facilities can be established; such a move could have ‘€˜a significant effect on nickel pricing in the near to medium future’€™, says Mr Wright, who also reported that stainless steel production in the UK reached 310 000 tonnes during 2011 and that the same level is forecast for 2012.

Stainless steel processing plants are running at high capacity utilisation rates in Germany and scrap from these operations is still available in sufficient quantities. In France, however, scrap and turnings availability has been poor during the early months of 2012 as low nickel prices have not persuaded domestic suppliers to sell their stocks. Material is still selling even when prices drop in Scandinavia, it is reported, and so stocks are not building to significant levels. Meanwhile, the main development affecting the stainless business in Europe has been Thyssen Krupp’€™s takeover by Outokumpu; this has already produced evidence of a production increase at the Terni facility in Italy which, it is argued, should become the continent’€™s leading stainless steel scrap purchaser. As a result, scrap exports from Italy will become even more of a rarity, it is added.

In the USA, stainless scrap requirements were reduced for April mill deliveries and May orders have indicated a continuing drop-off in demand.

With Russia seemingly on the verge of approving the World Trade Organization agreement, it is expected that scrap duties will be progressively trimmed year by year from their current level of 15%, starting from August 2012. This could lead to a boosting of exports of stainless steel scrap to international customers, assuming the main logistics hub – the port of St Petersburg – is allowed to continue scrap handling operations. If scrap operations are moved to Ust Luga some 100 km from St Petersburg, it is believed export activity could be impaired for several years pending completion of the required logistics infrastructure. On the issue of duties, it is noted that stainless steel is trading at low levels in Jordan because of the government’€™s decision to impose an export fee of US$ 70 per tonne. Shipments overseas have been duly impacted.

As regards the superalloys market, titanium scrap trading has stagnated because many of those holding material are choosing to hold on to it rather than to sell at lower levels. The nickel and cobalt based alloy sector has been steady in early 2012 and melters are continuing to report solid order books as well as limited scrap availability. ‘€˜Scrap continues to trade at historically high levels as compared to primary metal pricing,’€™ it is observed. ‘€˜We see this continuing through the third quarter and then would foresee some softening in the fourth quarter before a bounce-back to start 2013.’€™ The high speed steel market has recovered during the first half of 2012 while the tungsten carbide markets have remained inconsistent.

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