BIR Stainless Steel World Mirror May 2014

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.

The banning of ore exports from Indonesia – a key raw material source for China’s nickel pig iron (NPI) production – has helped propel nickel prices to levels not witnessed for a number of years.

At the same time, stainless steel scrap values have also registered substantial gains. The Indonesian ban, which will come up for review only after presidential elections in July this year, is said to have tipped the nickel market into short supply and re-balanced the playing field with China ‘which no longer has the price advantage of lower nickel unit values from the ability to produce NPI’.

Meanwhile, the sharp rise in molybdenum prices has filtered through to moly-based scrap while some support has been witnessed for titanium scrap ‘owing to concerns over Ti sponge supply from Russia given possible further European sanctions’ in light of the conflict in Ukraine.

The strength of stainless scrap demand in the USA is attributed to a shortfall in prompt 18/8 scrap availability, the ramp-up of the new Outokumpu mill and ‘a major lack of readily-available prime producer nickel and ferro-nickel’. Industrial generation of 18/8 scrap ‘has not significantly improved since the economic downturn of 2008/09’, it is pointed out, while some suppliers have been holding scrap off the market so as to ‘accumulate rather than sell’.

In Europe, meanwhile, reports from Italy indicate a fundamental balance between scrap supply and demand. Rising prices have ‘not yet caused substantial marketing of stocks that have been lying in dealers’ yards for a long time’. And even though profitability has improved slightly for scrap processors, capacities are continuing to ‘exceed the quantities available on the market’.

Some long-held stainless scrap inventories have indeed been released into the UK market and demand is expected to continue at reasonable levels. However, demolition activity remains subdued – a sign of reduced investment in new projects. Superalloy demand in the UK has remained ‘depressed’ but foundry activity has shown evidence of improvement, with ‘reasonable demand for molybdenum-bearing grades in particular’.

According to feedback from Northern Europe, crude stainless steel output levels have been ‘healthy’ but price pressure ‘remains strong’ on final products as a result of ‘cheap imports from Asia‘.

In Russia, meanwhile, the focus of concern has remained payment problems with regard to domestic mills. In the Middle East, the majority of scrap yard owners are ‘holding on tight’ to unsold stock in expectation of further nickel price gains. The region continues to commit billions of dollars to development projects, many of which are likely to bring substantial opportunities for stainless steel suppliers.

In the same vein, the award of the Expo 2020 to Dubai is expected to have ‘a very positive impact over the next six years’ for the whole Gulf area, with the associated boom in activity and improvement in profitability expected to extend to the 430, 304 and 316 grades of stainless steel.

Further east in Asia, India’s two largest stainless steel producers – Viraj and Jindal – increased their 300 series stainless output by, respectively, some 20% and 15% in the first quarter of this year. Over the same period, the country imported approximately 240 000 tonnes of austenitic stainless steel scrap. However, ever-rising nickel values have led to a reduction in stainless steel scrap volumes and also ‘fragile’ pricing.

The Indian rupee has recently regained around 7% of its value against the US dollar while the BJP’s emphatic victory in the country’s recent election has generated ‘great optimism and also hope for industrial and economic recovery’.

In contrast, lower industrial and economic growth numbers from China ‘are putting up a red flag’ while the crisis in Thailand – ‘a significant scrap supplier to the region’ – is also deemed ‘worrying’.