UNITED KINGDOM July 01 2015 10:15 AMTweet
LONDON (Scrap Register): Stainless steel market activity remains subdued, around the world, said MEPS International in a research note.
According to MEPS, stainless steel prices are quite stable. Transaction values, particularly for grade 304 material, edged upwards, in some countries, this month, as a result of the increase in LME nickel figures between April and May. Most European producers’ alloy surcharges, for type 316 products, were reduced in June, as molybdenum costs maintained their downward trend.
Consumption is sluggish, in all regions. On the positive side, car makers continue to record strong sales, while there are signs of increased building and construction activity in many developed countries. Meanwhile, the persistently low oil price has led to severely reduced investment in exploration projects. Sales volumes to the general manufacturing sector are yet to show any indication of the recovery that has been anticipated for some time. Speculators are cautious, especially in Europe, as they await some resolution of the Greek debt crisis.
Nevertheless, we have seen some small signs of encouragement. Basis values for coil products are too low to be sustainable, in the long term. Consequently, European producers have made clear their requirement for better returns on material for delivery after the summer vacation period. We have reports of some increases being agreed by buyers, already, and there are indications of further advances in the near future.
The medium-term outlook for nickel pricing is a matter on which market observers are not universally agreed. Many had predicted that, driven by the impact of the Indonesian ore export ban, global supply would slip into deficit by the middle of 2015. The prospect of this situation was expected to have an inflationary effect on nickel values.
In fact, a combination of weaker than anticipated demand and the utilization of alternative raw material sources, by Chinese nickel pig iron producers, kept supply in surplus. As a result, commodity prices for the metal have been on a downward curve since the beginning of the year, MEPS added.
Nonetheless, miners and market analysts alike believe that most of the factors required for a supply deficit are falling into place. Consequently, nickel values are forecast to increase, steadily, over the coming twelve months.