FALLING RAW MATERIAL COSTS DEPRESS STAINLESS STEEL PRICES IN 2015

FALLING RAW MATERIAL COSTS DEPRESS STAINLESS STEEL PRICES IN 2015

The past year has been another difficult period for stainless steel producers, distributors and traders, in all parts of the world, according to MEPS.

In December’s issue of the Stainless Steel Review, MEPS reports that consumption has failed to grow by any substantial degree and selling prices have plummeted, driven by falling raw material costs.

The major factor in the reduction in input expenditure has been the decline in nickel values. During the past twelve months, the price of nickel, in common with those of most other traded commodities, has described a generally downward curve. The LME cash figure for the metal has dropped from over US$15500 per tonne, one year ago, to US$8650 per tonne, in recent days. This represents a decrease of around 44 percent.

The nickel price has been undermined, in part, by the unprecedentedly high level of LME inventory. The official daily figure rose from 410,000 tonnes in December 2014 to reach a peak of over 470,000 tonnes in June of this year. Stocks steadily reduced thereafter, reaching a low of around 393,000 tonnes, earlier this month. However, a recent influx of material took the total over 438,000 tonnes, a few days ago.

The costs of the other major raw materials have also fallen. The price paid by US mills for chromium has decreased by around 10 percent in the past twelve months, while the cost of scrap, used in the American producers’ alloy surcharge calculations, has dropped by 56 percent.

As a result, the December 2015 alloy surcharge for grade 304 flat products, in the United States, is 46 percent lower than the figure one year earlier. This contributes to a transaction value for 304 cold rolled coil that is around 37 percent less than last December’s price.

The mill selling figures for the same product, in US dollar terms, have fallen by 32 percent, in China, and by nearly 25 percent, in the EU, compared with twelve months ago.

The persistent negative trend in stainless steel selling values has created very troublesome business conditions for all participants in the supply chain – producers, distributors, stockholders, service centres and traders.

The winners have been the multiplicity of OEMs that incorporate items which require corrosion- or heat-resisting properties.

Source: MEPS – Stainless Steel Review – December Issue

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