Stainless MMI: Index ticks up 4.8% as demand in China begins to recover

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Maksym Yemelyanov/Adobe Stock

The Stainless Monthly Metals Index (MMI) rose 4.8% this month.

Chinese stainless demand recovers; LME, SHFE prices gain

While much of the rest of the world remains in the thick of the COVID-19 crisis, a tentative recovery has begun in China — a recovery that includes stainless steel demand.

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According to Reuters, China’s stainless steel prices recently surged to a nine-month high, reflecting a rise in domestic demand as China emerges from the worst stages of the pandemic. Per the report, SHFE stainless steel price rose to 13,675 yuan per ton earlier this ($1,931.55) week, its highest since Aug. 1.

The most-traded SHFE contract closed Wednesday at 13,425 yuan per ton.

Meanwhile, LME nickel prices have made significant gains in recent weeks.

After nearly falling below $11,000/mt in late March, LME three-month nickel has recovered to hover around the $12,100/mt mark.

DOC self-initiates circumvention case on stainless steel from China

On Tuesday, the U.S. Department of Commerce announced it had self-initiated an inquiry of potential circumvention of anti-dumping and countervailing duty orders of stainless steel flat-rolled products from China that had then been finished in Vietnam.

“Typically, circumvention inquiries are initiated in response to allegations filed by the domestic industry,” the DOC noted in a release. “However, Commerce’s regulations provide that these inquiries may be self-initiated when Commerce determines from available information that an inquiry is warranted. This is the seventh circumvention inquiry self-initiated by Commerce based on its own monitoring of trade patterns – a new trade enforcement tool created by the Trump administration.”

In addition, the DOC is also self-initiating a concurrent scope inquiry to determine if “stainless sheet and strip from Vietnam is within the scope of the AD/CVD orders on stainless sheet and strip from China.”

“The orders’ scope language states that the orders include stainless sheet and strip that has undergone certain types of minor processing in third countries,” the release continued.

Norilsk Nickel reports Q1 results

Russian nickel producer Norilsk Nickel recently reported its Q1 2020 production results, stating nickel production declined 7% year over year to 52,000 tons.

“The decline was attributed to accumulation of work-in-progress inventory owing to the pre-commissioning of the new chlorine leaching refining shop at Kola MMC and a build-up of semis inventories at Norilsk Nickel Harjavalta to ensure uninterrupted production during a navigation break,” the firm said. “As part of strategic diversification of sales into premium products, production of carbonyl nickel increased 39% y-oy to 1.6 kt.”

Stainless surcharges for Q2

Last month, we noted a delay in the publishing of Q2 stainless steel surcharges on account of the lockdown in South Africa, a major ferrochrome producer (which makes up a significant component of the stainless surcharges).

However, the European benchmark ferrochrome price has since been settled at $1.14 per pound for Q2 2020, up from $1.01 per pound in Q1. (South African has begun to ease restrictions related to the pandemic after first extending the initial lockdown phase through the end of April.)

Merafe, a major South African ferrochrome producer, resumed operations May 8 at its Lion smelter and Eastern Chrome mines.

“Shareholders are hereby advised that the Glencore Merafe Chrome Venture (the “Venture”) has recommenced operations at the Lion smelter and Eastern Chrome mines,” Merafe said. “Furthermore, the Venture’s UG2 plants will commence operations in a phased approach once platinum mines resume operations. The Venture has implemented stringent COVID-19 restrictions and return to work processes that include screening and testing procedures and strict social distancing protocols at each operation. These procedures are in line with the South African Government COVID-19 regulations and guidelines.”

North American Stainless announced a reduction in its fuel surcharge.

“For the month of May 2020, North American Stainless will reduce the fuel surcharge to 18% for stainless flat and long products,” NAS said in a release April 28. “The surcharge rate is considered the maximum level for May and will be reviewed monthly.”

Outokumpu: weakening customer demand in April

Meanwhile, stainless producer Outokumpu released its quarterly report earlier this month, one that unsurprisingly gave significant attention to the COVID-19 pandemic.

“Stainless steel deliveries in the first quarter declined by 5% compared to the reference period in 2019 and realized prices were lower,” Outokumpu reported. “Profitability was however positively impacted by significantly improved raw material efficiency and lower costs. Raw material-related inventory and metal derivative losses were EUR 22 million (losses of EUR 13 million). Lower ferrochrome benchmark price had a negative impact on business area Ferrochrome’s profitability. Other operations and intra-group items’ adjusted EBITDA was EUR -6 million (EUR 1 million).”

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Actual metals prices and trends

The Allegheny Ludlum 316 stainless surcharge fell 14.3% month over month to $0.72/pound. 304 fell 8.5% to $0.54/pound.

Chinese 316 and 304 cold-rolled coil gained slightly, rising to $2,938/mt and $2,140.23/mt, respectively.

LME primary three-month nickel rose 7.6% to $12,209/mt.

Chinese primary nickel rose 8.8% to $14,393.37/mt. Indian primary nickel jumped 8.1% to $12.37/kilogram.

FeCr lumps rose 0.4% to $1,474.06/mt.

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