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.
Indonesia′s nickel ore export ban, which seems likely to remain in place for now, continues to be a major discussion point even though it does not appear as yet to have really tightened the physical market in Asia. LME nickel stocks are rising, availability of scrap in Asia looks to be easing and indications suggest leading stainless steel producer China has no short-term deficit of nickel units.
At the same time, China seems no nearer to becoming a buyer of stainless steel scrap from overseas. Production and scrap buying by other stainless mills in Asia have been slow – a situation deemed unlikely to change until the end of September. With average levels of scrap generation in the region, stocks are slightly higher than normal as generators await a demand increase later in this quarter.
India upped its austenitic stainless steel production to an estimated 225 000 tonnes in the second quarter of 2014. This entailed aggressive buying of stainless scrap and substantially higher financing needs for domestic stainless steel producers given the rapid increase in raw material costs.
But with sales relatively sluggish, Indian demand for stainless scrap has dropped sharply in the third quarter; indeed, significant volumes are still at Nhava Sheva port awaiting collection by the mills. A return to more normal conditions is anticipated in India′s stainless steel scrap market in September.
In the USA, mills′ scrap purchasing needs are being met by domestic suppliers. Any shortfall in domestic scrap availability could be supplemented by bulk cargoes ′from what is now basically the US/Euro market′. Conversely, any significant reduction in mill needs for stainless scrap ′could fairly rapidly build supply inventories′.
Across in Northern Europe, the first half of this year brought ′solid′ demand for stainless products, satisfactory levels of profitability for the majority of mills and high demand for stainless scrap. Production of flat and long products has also been healthy in Italy, with lower scrap availability counterbalanced by the release of intermediate dealers′ stocks once prices improved.
At the same time, there has been greater competition from Asian markets as regards new product offers and scrap purchasing. The UK also points to ′competitively-priced imports from Asia…negating any attempt by mills to seek price increases′.
Scrap selling terms have remained largely unchanged while supply has been sufficient to enable processors to meet mill requirements. However, scrap prices remain ′highly competitive′ and margins are ′tight′. For the third quarter, UK stainless steel production is expected to continue ′at reasonable levels′.
Stainless steel scrap is selling easily within Russia; with many end buyers receiving financial support from the government, suppliers feel more reassured about obtaining the market price and their money. At the same time, there are concerns within Russia over the possibility of Ukraine-related EU and US sanctions extending to scrap and other commodities.
Meanwhile, widespread strife in the Middle East has led to destruction at many oil and gas fields, thus generating significant quantities of stainless steel and high-nickel scrap. In the region, all grades of stainless steel have been heavily traded following the recent increase in LME nickel.
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