Stainless steel prices follow jumps seen in carbon steel products
The global stainless steel market is enjoying a similar rally to that seen by carbon steel,
supported by tight supply and record levels for raw materials.
CHINA
China's stainless steel market and futures prices increased last week. At the same time,
nickel futures on the London Metal Exchange also hit a new high.
On 7 January on the Shanghai Futures Exchange March 2021 stainless steel futures
closed at CNY 14,725/tonne ($2,276/t), up by 4.95% compared with Wednesday.
Meanwhile, the three-month nickel price on the London Metals Exchange crossed
$18,000/t, hitting its highest level since September 2019 and a 2.3% gain on
Wednesday's closing price.
The rise in China's stainless steel prices is mainly driven by rising raw materials costs. At
the same time, domestic stainless steel inventory has dropped significantly. The
shortage of supply has caused serious shortages for certain sizes on the market, and
prices have been driven higher as a result. An outbreak of end-user buying has caused
some steel mills to stop taking orders, and some existing March orders have been
rescheduled to May. In parts of China, freight restrictions have also exacerbated the
imbalance between supply and demand.
As many Chinese smelters are using recently purchased high-priced nickel concentrate,
the cost of smelting nickel pig iron is still high. Indonesia has increased its
benchmark price for nickel. In addition, the continued unrest in New Caledonia, has
exacerbated market participants' concerns about supply.
EUROPE
Stainless steel prices in Europe are on the verge of increasing again significantly as the
main European mills are not quoting for hot and cold rolled coils and stainless scrap
prices are also forecast to increase sharply. Service centres and re-rollers foresee an
important shortage of material as mills in Europe have long lead-times while the level of
stocks at buyers is low.
The main European mills were selling last month for May and June delivery. Material
shortage and slow deliveries are causing coil derivatives prices to skyrocket. A large
service centre says they were this week forced to push up their values by €100/t ($123/t)
across their range of sheets this month. If buyers refuse the increase they will refuse to
sell at lower prices. Stocks are declining, business is booming, and demand is
particularly strong. With lengthy deliveries throughout the value chain, most distribution
companies and end-users will find themselves with less and less supply over the next
three or four months, sources say.
Meanwhile coil buyers have been purchasing as much as possible but traditional
coil sellers to Europe such as India and China are not even quoting at the moment as
they are focusing on their own markets.
Stainless coil prices have been hard to pin down in December as mills kept increasing
values and stopping sales. The latest values in December for HRC were €2,200/t
delivered on average and €2,300/t for CRC, sources say. When mills go back to quoting
next week, prices are seen increasing by €200/t compared to December, sources
believe.
The current material shortage is seen persisting. If mills’ delivery time extends to six
months, coil prices are seen reaching €3,000/t delivered, Kallanish is told.
Bron Kallanish.com