Demand for stainless steel grows as US and Europe grapple with shortages
the Monthly Stainless Metals Index (MMI) increased 4.3% for this month’s reading, as demand for stainless steel is expected to continue growing in the years to come.
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Increase in stainless steel production, demand
According to data from the International Stainless Steel Forum (ISSF), the production of the stainless steel smelting workshop increased 24.7% year-on-year to 14.5 million tons metrics in the first quarter of 2021.
Most of the increase in production came from Europe and the United States, where production jumped 11.0% and 9.7%, respectively. The only region that experienced a contraction in production was China. Chinese production fell 0.5% to 8,198,000 metric tons.
This coincides with a report by Precedence Research, in which it estimates that the stainless steel market size will grow to US $ 168.24 billion by 2027, from US $ 106.84 billion in 2019.
Precedence predicts an increase of 57.5% over the eight-year period due to the growing preference for stainless steel over regular steel and its increasing application in prefabricated buildings. In addition, the demand for steel in the construction, automotive and transportation sectors is expected to continue to grow.
The US Department of Commerce, Enforcement and Compliance said in its analysis of steel imports to the United States that steel imports nearly doubled in May from the 18-month average of 60,800 metric tons to 118,000 metric tons.
Taiwan accounted for 11% of total imports in May, followed by India at 4.6%. Meanwhile, the United States and Europe were grappling with a supply shortage.
Base price and increase of the supplement
Contract buyers should be prepared for sharp increases in base prices and surcharges for the next contract period. This is especially true for any alloy that is not 304, 304L, or 316L.
The contracts with Outokumpu 201, 301, 201LN and 301LN will pay base prices higher than North American Steel (NAS). While there is still an advantage to using options of less than 304 nickel, the savings gap continues to narrow.
Alloy supplements increase in June. NAS’s June alloy surcharge for 304 is $ 0.9612 / lb, an increase of $ 0.0473 / lb from May.
Chinese economic recovery and nickel
According to the Nickel Institute, nickel is expected to play an important role in China’s 14th Five-Year Plan.
Although their name is not mentioned, nickel and materials containing nickel will likely be needed as China moves away from high speed growth and instead moves towards high quality growth. The particular focus on growing manufacturing and infrastructure will further increase demand for the many forms and uses of nickel, including stainless steel, industrial chemicals and metal alloys.
Nickel is likely to attract new demand from the development of strategic and emerging industries (S&EI) which includes “new energies, new materials, high-end equipment, new energy vehicles (NEV), aerospace and aviation. , as well as offshore engineering equipment. “
The five-year plan states that “M&EIs have the common mission of contributing 17% of total GDP. Among them, NEV is the avant-garde to achieve a penetration rate of 20%. It is important to note the use of high nickel cathode technology used in the batteries of some new energy vehicles.
In addition, in the new energy sector, hydroelectric and offshore engineering projects could further increase the demand for nickel due to their need for durable and corrosion resistant materials.
Real metal prices and trends
Allegheny Ludlum 304 stainless steel supplement rose 5.3% month over month to $ 0.99 a pound this month. Meanwhile, the Allegheny Ludlum 316 supplement remained stable at $ 1.30 a pound.
Chinese cold-rolled coil 316 rose 6.8% to $ 3,925 per metric tonne on June 1. Meanwhile, cold rolled coil 304 rose 10.7% to $ 2,794 per metric ton. Chinese primary nickel jumped 4.6% to $ 20,988 per metric tonne.
The LME’s three-month nickel jumped 1.9% to $ 17,843 per metric tonne.
Indian primary nickel rose 3.2% to $ 18.45 per kilogram.
Stop obsessing over the expected real price of nickel. It is more important to spot the trend.