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Recession worries stainless steel producers

Stainless steel producers in Europe are becoming increasingly worried about demand for their products because of the expected recession across the continent.

The sentiment has been expressed by Joost van Kleef, Europe, chairman of BIR’s stainless steel and special alloys committee. ‘This is a challenge faced by most industries, to which we can add the influence of a record level of imports of finished goods, particularly in the stainless steel sector,’ he writes in the latest BIR Mirror. ‘As a result, sales prices for stainless steel have fallen rapidly – in fact, faster than ever before.’

Van Joost notes that producers are witnessing one of the sector’s lowest capacity utilisation rates and says the situation is unlikely to improve in the short term. As a result, both demand and prices for stainless scrap remain very low.

The US perspective comes from fellow board member Doug Kramer of Spectrum Alloys. ‘US manufacturers have become increasingly concerned about managing their inventories in the face of rising interest rates, slowing demand and a stronger dollar,’ he writes. ‘The traditional summer lull in steel output and trading activity has also played a part.’

According to the American Iron and Steel Institute, year-to-date US crude steel production through to late September was down 4% compared to the corresponding period last year. At the same time, the US steel industry’s capacity utilisation rate dipped to 76% by late September, down from more than 83% at the same time last year.

Although declining container rates are indicative of gradually improving availability, Kramer notes the US continues to suffer from shortages of trucks and truck drivers.

On the brighter side, softening domestic market conditions have been partially offset this year by rising export demand for recycled stainless steel. According to the US Commerce Department, more than 253 000 tonnes of stainless steel scrap were exported in the first six months of 2022, a 67% increase over the corresponding period in 2021.

According to board member Vegas Yang of HSKU Raw Material in Taiwan, ‘Asia’s demand for stainless steel continued its downturn into the third quarter of 2022 and the outlook for the final quarter is not looking strong, so we can expect a dull end to the year.’

Stainless scrap demand is healthy in China and there have been some imports of stainless scrap into China from Europe, something rarely seen in recent years. India’s 15% export duty on finished stainless products, meanwhile, has slowed demand for scrap imports into that country.

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