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Optimism in stainless steel snapshot

The stainless steel sector in the EU has recorded a solid start to the year, supported by some price increases, according to industry players who say demand for stainless scrap is healthy.

The observations come in the latest quarterly World Mirror report on the stainless steel and special alloy market from the Bureau of International Recycling. Committee chairman Joost van Kleef, of Onyx Stainless, says, ‘EU order intakes remain at healthy levels and some price increases have finally been realized, albeit unfortunately to a lower extent than necessary.’

Van Kleef notes demand is being driven by restocking of the stainless supply chain and increased requirements from selected sectors.

‘However, a very important supportive trend which should not be underestimated is the significant decline in import penetration of the European market for stainless steel,’ he says. ‘This has resulted mainly from logistical constraints: means of transportation are limited or just not available, or freight costs simply do not justify shipping into Europe. As a result, demand for stainless scrap has remained healthy and in line with supply.’

He notes that the availability of scrap has increased as sourcing has been supported by a ferrous price rally and higher nickel values, although rises in the early weeks of the year ‘corrected significantly’ at the beginning of February.

Committee member Vegas Yang of HSKU Raw Material in Taiwan reports weak stainless scrap demand in China until around mid-November, after which demand and pricing rose, along with steel scrap prices. ‘China’s stronger recovery from Covid-19 in economic terms is translating into improved demand for stainless steel products, with the result that raw material prices are climbing within the country,’ he says.

Vegas adds that logistics has been one of the biggest bottlenecks with containers unavailable and freight rates increasing on a weekly basis. ‘A lot of cargoes cannot be shipped owing to this lack of container availability,’ he says. ‘Furthermore, trade in lower-value items like chrome steel and 200 series stainless has reduced substantially as the very high freight costs do not justify the trade.’

Looking at the US, Doug Kramer of Spectrum Alloys says scrap market conditions improved significantly in December and January.
‘A number of factors contributed to the strong start to the year for stainless steel and scrap markets, including consumer restocking, rising nickel prices and surging carbon steel markets,’ he writes.

He says the outlook for the first quarter of 2021 is largely positive, even though major challenges persist for North American recyclers.
‘Major stainless steel producer Outokumpu expects its stainless steel deliveries to increase by 10-20% when compared to the final quarter of 2020. But the rebound in manufacturing and commodity prices has started to show signs of slowing recently.’

As a result, he adds, US scrap recyclers continue to face unpredictable markets and a range of obstacles, including extremely challenging labour and transportation markets, while potentially higher regulatory costs and trade restrictions are also of concern.

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