Limited hope for brighter stainless steel trade

The year has begun on a better footing for the stainless steel sector in Europe with mills expected to increase production and shipments.

The sentiment is expressed in the latest quarterly Mirror from the Bureau of International Recycling. It notes that this follows a ‘challenging’ fourth quarter of 2023.

Joost van Kleef, of Oryx Stainless in the Netherlands and chairman of BIR’s stainless steel and special alloys committee notes the Eurozone grew just 0.5% across the full year.

‘Demand for stainless steel flat products in Europe saw a significant, two-digit decline while European production of crude stainless steel fell by some 8% year-on-year during the first nine months of 2023, according to official numbers from worldstainless,’ he writes.

‘The sharp reduction in stainless steel imports from third countries, however, helped to mitigate the reduction in crude production.’

Demand for scrap is described as robust in the second half of 2023, although depressed manufacturing and slow industrial production left availability in Europe constrained. Imports of stainless scrap into Europe saw a 27% year-on-year increase.

Asian picture

Vegas Yang, of HSKU Raw Material in Taiwan, offers an Asian perspective, noting that whereas chrome prices have been relatively stable, the ‘nickel roller-coaster ride that began in 2022 has yet to reach the station’.

Low levels of scrap coming from manufacturing activities owing to the general macroeconomic slowdown are impacting local processors’ ability to offer the tonnages requested by Asian mills, he writes.

At the same time, the continued low production of end products from mills has kept the market within a narrow range. In the final quarter of last year, Taiwanese mills’ demand for stainless steel scrap was satisfactory, if a little weak.

Imports of hot coil retreated to 50 000 tonnes in December compared to an average of around 70 000 tonnes up until the third quarter.

South Korea’s stainless steel scrap demand was healthy in the fourth quarter of 2023 and seems stable, Yang adds, but there is no desire to keep large additional volumes of scrap in inventories.

Ongoing problems in the real estate sector in China continue to dog the overall economy, forcing down the stock markets in China and Hong Kong.

Stainless steel prices have nosedived: 304 stainless coils futures in Shanghai started October at around US$ 14 800 per tonne but fell to US$ 12 200 in late November before stabilising at US$ 12 700 in January.

Imports of stainless scrap into India have been very slow since last year’s final quarter and this trend has continued into 2024.

The biggest factor is imports of semi-finished goods instead of scrap. Another is higher interest rates prompting mills to maintain low scrap inventories.

US picture

Meanwhile, fellow board member Doug Kramer of Spectrum Alloys LLC (USA) writes in the Mirror that stainless steel recyclers in the USA have faced a number of challenges. This includes declining domestic stainless steel production, falling nickel prices, sluggish manufacturing output, elevated interest rates, increased regulatory oversight and rising transportation costs.

According to worldstainless, US stainless steel melt shop production fell 12.9% year-on-year in the first nine months of 2023 to 1.38 million tonnes.

The decline in US stainless production coincides with slumping manufacturing output more broadly, Kramer says.