Nickel prices threaten stainless steel output

Rising nickel prices are expected to have an impact on an already weakened stainless steel sector, according to market participants.

A picture of below-expectation performance is painted in the latest BIR Mirror. Joost Van Kleef, chairman of the global recycling organisation’s stainless steel and special alloys committee, says the growth in nickel prices has been supported in the US by Federal Reserve policy and China’s announcement of stimulus packages.
‘However, an increase in raw material pricing will have a further negative impact on production of stainless steel as the market is not ready to digest any price increase at this stage owing to the low level of demand,’ Van Kleef writes.

German disappointment

He goes on: ‘The threat of fresh inputs of finished goods has not diminished as demand in China also remains below expectations and the pipeline of finished goods remains full. New market stimulus can only be expected once demand has picked up, both in Europe and in the Far East.’

He also notes that European demand for stainless finished goods remains below expectations. Germany’s industrial sector in particular continues to disappoint analysts, with Europe’s largest economy expected to shrink again this year, fuelling fears of a longer recession.

Scrap demand

Fellow committee member Vagas Young of HSKU Raw Material in Taiwan also notes the rising nickel prices but feels more time will be needed to see whether there will be a revival in the physical market.

Reviewing the third quarter across Asia, Young reports that Taiwanese mills’ demand for stainless steel scrap is stable but pricing has been forced downwards by competition from nickel pig iron. South Korea’s scrap demand is considered healthy although there has been a flood of hot coils arriving from China where domestic supply is outstripping demand. Japan’s stainless scrap demand for domestic consumption is steady. The country’s exports of stainless scrap have declined slightly from earlier months and the trend is expected to continue in the fourth quarter.

Over the last couple of months, Young adds, India has seen normal demand for buying stainless scrap. ‘However, there is a slight pressure to be less aggressive owing to several factors such as weak order books for finished stainless goods and high interest rates. Mills want to end this year on a positive note and to avoid too many unwarranted risks.’