BIR world mirror Stainless March 2010

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

Global production of stainless steel slid from 26.4 million tonnes in 2008 to 23.5 million tonnes in 2009 despite a 15% output leap in China resulting from the implementation of the Beijing government’s stimulus package. World availability of stainless steel scrap fell more than 10% last year to 6.8 million tonnes; however, there was no appreciable pick-up in demand for scrap until well into the second half of 2009.

Signs of a market improvement have emerged in early 2010, leading to a belief that global stainless steel production could reach 27 million tonnes this year whereas scrap availability appears likely to improve by a somewhat smaller 10%. With most of this increase not expected before the second half of 2010, demand for scrap is expected to outstrip supply throughout the year.

China appears predominantly self-sufficient in terms of its scrap requirements, with nickel pig iron an important source of nickel units. In many other parts of the world, however, reduced manufacturing activity is serving to produce tightness – sometimes severe – in the scrap supply pipeline.

In the case of Germany and Belgium, crude stainless steel production across the two countries tumbled 25% last year but is likely to rise 15% in 2010. Meanwhile, a 15% drop-off in scrap availability last year is expected to be answered by a far smaller increase of around 4% in 2010, thereby suggesting insufficient secondary raw material will be available to meet the higher demand from consumers.

A similar message is coming from the UK where scrap availability is described as poor, thereby creating limited opportunity for exports. Stainless steelworks in Italy have increased their scrap ratios; however, with the drop in availability, demand for 304 is exceeding supply.

The major flat rolled stainless producers in the USA are showing more scrap purchasing gusto than last year, resulting in price escalation within the wholesale buying market. A continued lack of manufacturing activity has eroded industrial scrap arisings while delivery of a significant proportion of available secondary raw material has been delayed by severe weather conditions. Scrap dealers are reportedly reluctant to part with materials they cannot easily replace.

In contrast to the norm elsewhere, stainless steel mills in Scandinavia have been reporting few problems in sourcing scrap, with volumes in merchants’ yards said to be close to pre-crisis levels despite the winter snowfalls. The leading stainless producers are understood to have been operating recently at around 80% of capacity in response to good demand.

Overall, however, domestic pricing within Europe and the USA has been sufficiently high to attract scrap that might otherwise have headed into key Asian markets such as China and India.

Although supply of scrap in India is seen as adequate, stainless steel producers have been deterred from indulging in extensive buying activity by the high prices resulting from elevated nickel and molybdenum values. Mills are responding to a rapid recovery in demand for their products by pushing up utilisation rates to between 80% and 90% and by pursuing capacity expansion projects.

Despite the recent reduction in the consumption of stainless steel within the industry and construction sectors of the Middle East, there are no signs of a slow-down in recycling activity in the region. But while the global outlook for 2010 is brighter, there are concerns as to whether the current demand for stainless steel is real or artificial. Uncertainty has also been created by the extreme volatility of the nickel price, with the consensus being that current high levels for the metal owe more to speculative activity than to supply/demand developments within the stainless steel market.

Among the superalloys, there has generally been an improvement in demand. Nickel alloy business levels have improved significantly for the first quarter of 2010 while second quarter forecasts are for decent-to-good activity. The pick-up in cobalt alloy business and price levels has been less pronounced than for nickel alloys. However, the titanium alloys have performed best of all and the outlook for the second quarter is healthy across all product lines. Continuing good demand is also anticipated for high speed steel.