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The collapse of world nickel prices disrupts stainless steel market |
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Decline of world nickel prices to $12/lb this week - half what the alloying metal cost in May - has disrupted the global stainless steel marketplace: Producers are trying to avoid a pricing freefall for nickel-bearing steels and superalloys despite weakened demand and lower nickel costs. Some Korean mills have even closed for a time because Asian distributors and end-use buyers are holding back on orders.
Some analysts believe the collapse of nickel prices on the London Metal Exchange (LME) will cause stainless steel producers to abandon the “basis-price-plus-surcharge” mechanism for selling their products, according to some observers. But it hasn’t happened yet in the U.S. and Canada.
Reduced purchasing of stainless steel also is occurring in North America where service centers lately reported the lowest monthly shipments rate since last winter. Distributors aren’t buying as much stainless steel as before because high inventories at the start of the summer haven’t been run down. The nickel price decline has made the stocks overpriced in a weak purchasing period.
End-use buyers have been expanding the use of low-nickel alternative grades and no-nickel metal substitutes all year. Distributors admit they are trying to run down high-priced stainless stocks as quickly as they can, but buyers at original equipment manufacturing firms aren’t ordering much—expecting to see prices fall. In fact, Purchasingdata.com’s survey of buyers in August finds the lowest percentage in 27 months expecting to see stainless steel sheet prices rising.
Buyers this month are complaining that some U.S. stainless steelmakers have been fighting to keep sales prices elevated—even as their nickel surcharges for Type 304 sheet have slipped by 11% since March to $2,258/ton ($1.264/lb).
Phil Meeker, senior buyer for floor-cleaning equipment maker NSS Enterprises in Toledo, Ohio, is typical of those buyers who expect to see continued reduced nickel prices and associated stainless pricing in the fourth quarter. A spokesman for world stainless producer and distributor ThyssenKrupp of Germany points out that “where stainless alloy surcharge mechanisms are in place—Europe and the U.S.—there will be a 2- to 3-month time lag before stainless prices catch up with lower nickel prices.”
The ThyssenKrupp spokesman tells the Metals Insider subscription newsletter that there will be no short-term turnaround in the stainless market with any recovery likely several months away. “In the coming months, the stainless market will be strongly influenced by the development of the nickel price,” a steelmaker spokesman says. ”As the price of nickel declines, distributors have recently been making efforts to run down their stocks quickly, and these efforts will continue in the short term.” back to the News |
