Page 74 from: Recycling International November/December issue 2024

MARKET ANALYSIS

Shifting expectations
Excess nickel output in China and Indonesia, less-nickel-intensive EV batteries,

and a stronger dollar have put pressure on prices. But renewed focus on cutting

carbon emissions may provide a silver lining for scrap demand.

million tonnes. Along with increased
stainless production in the United
States (+9%), Europe (+0.3%) and
‘Others’ (+10.5%), worldstainless esti-
mates global melt shop production
increased 6.3% to nearly 30.4 million
tonnes during the first six months of
the year with China accounting for
62% of global output.
Corporate reports from the major
stainless steel producers in the West
indicate mixed market conditions in
the third quarter of 2024. According
to preliminary Q3 2024 results from
Finland-based Outokumpu Oyj, trans-
action prices for 304 stainless in
Europe and the Americas came under
pressure in the third quarter as scrap
prices softened. However, the compa-
ny’s third quarter stainless deliveries
in Europe were steady at 316 000
tonnes and ebitda improved to EUR
86 million for the quarter. While
Outokumpu’s stainless deliveries in
the Americas business unit slipped in
the third quarter, the overall recycled
material content in their stainless pro-
duction remained elevated at 95%.

US-EU EXPORTS UP
Of note, as European stainless steel
deliveries have stabilised, US exports
of stainless steel scrap to Europe
have been surging. According to US
Commerce Department data, US
exports of stainless steel scrap to
Finland, the Netherlands and Belgium
combined more than tripled year-on-
year to nearly 54 000 tonnes during
Jan-Sep 2024.

Outokumpu’s forward guidance indi-
cates ‘Group stainless steel deliveries
in the fourth quarter are expected to
decrease by 0–10% compared to the
third quarter, driven by deteriorating
markets for both business areas in
Europe and the Americas’. That guid-
ance coincides with generally nega-
tive manufacturing indicators overall.
According to the Institute for Supply
Management, US manufacturing
declined by 0.7 points to 46.5 in
October, the lowest reading in 2024
and marking a contraction in the US
manufacturing sector in 23 of the last

Indonesia, the group reports ‘the rate
of growth of nickel use in batteries for
electric vehicles (EV) has been lower
than expected, negatively affected by
the increased relative use of non-nick-
el containing batteries (mainly lithium
iron phosphate) and a recent surge in
demand for plug-in hybrid EVs at the
expense of battery EVs’. Analysts at
Macquarie Insights note that contin-
ued excess nickel production in
Indonesia and China has led to pro-
duction curtailments in Australia,
Brazil, Madagascar and New
Caledonia.

RISING OUTPUT
Stainless steel production in China
has also been growing this year.
According to World Stainless
Association (worldstainless) estimates,
Chinese stainless steel melt shop pro-
duction increased 5.9% year-on-year
during the first half of 2024 to 18.75

74

Nickel prices at the London Metal
Exchange have been under pressure
recently amid global nickel surpluses,
growing inventories at exchange
warehouses and a rising dollar that
tends to weigh on dollar-denominat-
ed commodities. Having traded
around US$ 18 000 per tonne in early
October, LME three-month nickel
prices dipped below US$ 16 000 in
early November. Meanwhile, nickel
stocks in LME warehouses rose to
more than 143 000 tonnes in late
October, up from around 45 000
tonnes one year earlier. The influx of
primary nickel into LME warehouses

has largely been attributed by
Reuters to rising deliveries from China
following the acceptance of five
brands of Chinese nickel as ‘good
delivery’ for the LME nickel contract.

SURPLUS GROWTH
According to the International Nickel
Study Group (INSG), the global sup-
ply surplus is expected to rise slightly
from 167 000 tonnes in 2023 to 170
000 tonnes in 2024 before easing
back to 135 000 tonnes in 2025.
Although the INSG is expecting
growth in stainless steel demand in
2024 and 2025 from China and

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