Page 48 from: Recycling International February issue | 2021
market analysis
Despite strong start, 2021
outlook hard to predict
Uncertainty surrounding Covid-19 and the rollout of vaccinations continue to dog
expectations for primary and secondary trade.
(+5.4%), and Asia excluding China and
South Korea (+50.6%). Even so, ISSF
estimates global stainless melt shop
production declined 7.8% during the
first nine months of 2020 to 36.7 mil-
lion tonnes as Covid-19 shutdowns
weighed on production in the first half
of the year.
The decline in stainless steel output in
the second quarter of 2020 and the
subsequent rebound were also reflect-
ed in major economic and manufactur-
ing reports. In the US, for example, the
Bureau of Economic Analysis reports
real GDP plunged 31.4% in the second
quarter followed by a record 33.4%
increase in the third quarter – effective-
ly restoring the previous position. The
months’ long shutdown in most of the
developed economies in early 2020
resulted in a shortages of manufac-
tured goods and raw materials, fol-
lowed by considerable pent-up
demand and rising prices as global
supply chains were impacted.
According to IHS Markit’s latest
Composite PMI report, ‘significant sup-
ply chain delays, raw material shortag-
es and evidence of stockpiling at
goods producers pushed input prices
up [in January]. The rate of cost infla-
tion was the fastest since April 2018,
with firms raising output charges at the
sharpest pace since July 2008 in an
effort to partially pass on higher cost
burdens to clients.’
OUTLOOK POSITIVE, DESPITE
RISKS
Federal Reserve Chairman Jerome
Powell recently warned that the Covid-
19 pandemic was causing ‘tremendous
human and economic hardship’ across
around the world. ‘The pace of the
recovery in economic activity and
employment has moderated in recent
months, with weakness concentrated in
the sectors most adversely affected by
the pandemic,’ he said. Yet despite
continued uncertainty surrounding the
Covid pandemic, most economic fore-
casters are still projecting better days
ahead in 2021, which should bode well
for nickel, stainless steel and scrap
metal demand. The IMF projects the
global economy will grow 5.5% in
pants, these contrasting challenges
and opportunities are contributing to
an increasingly unpredictable outlook
this year.
PENT-UP DEMAND
According to the latest figures from
the International Stainless Steel Forum,
global stainless steel melt shop pro-
duction bounced back 17.5% in the
third quarter of 2020 as compared to
the preceding quarter to more than
13.5 million tonnes. The rebound in
stainless production in the third quar-
ter was widespread, including quarter-
on-quarter gains in China (+14%), the
United States (+10.9%), Europe
48
As global manufacturing indicators
improved in the second half of 2020,
reported metal prices and correspond-
ing scrap flows improved late in the
year and into 2021. At the London
Metal Exchange, nickel prices rose
from US$ 16 540 per tonne at the end
of 2020 to more than US$ 18 300 per
tonne in late January. At the same
time, scrap market participants report
that business conditions improved sig-
nificantly in December and January
amid rising prices and healthier
demand from the manufacturing sec-
tor. But the economic, manufacturing,
and commodity market rebound has
started to show signs of weakness and
scrap recyclers in particular are facing a
range of challenges including difficul-
ties hiring and retaining employees,
transportation and logistical bottle-
necks, and potentially higher regulato-
ry costs and trade restrictions. For nick-
el and stainless steel market partici-
48-49_manickelstainless.indd 48 01-02-21 13:52