The Stainless Monthly Metals Index (MMI) increased by 11.3% for this month’s index value, as stainless steel surcharges rose for a fourth consecutive month.
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Stainless steel surcharges continue to increase
Stainless alloy surcharges are rising for the fourth month in a row.
Alloy surcharges for 304 in September will be $0.6231/lb, an increase of $0.0361/lb compared to August.
Over the past month, LME nickel prices increased approximately 12%, up to $15,442/mt by the end of August.
Chinese nickel price followed a similar trend, increasing to $17,590/mt (or CNY 120,750/mt).
U.S. demand recovery
Throughout July and August, the U.S. Department of Commerce reported the U.S. imported a total of 93,600 metric tons and 88,700 metric tons of all stainless products, respectively. The totals were twice as high as the year’s bottom of 46,800 metric tons back in May. Furthermore, the totals were much higher than the 2019 average of 64,600 metric tons.
Import levels reported match the expansionary track the U.S. has seen in the past four months.
August ISM PMI data came in at 56%, up 1.8 percentage points from July. Moreover, the ISM Manufacturing New Orders index came in at 67.6% in August compared to 61.5% in July.
Auto industry outlook
Besides consumer goods, the automotive industry is another major consumer of stainless steel.
As the U.S. presidential election approaches, both candidates have expressed their desire to boost the U.S. auto industry to create jobs.
A few particular differences could impact the price of stainless steel.
Tariffs and the trade war with China could lead to a price increase. On the other hand, the shift from combustion engine to battery-electric propulsion could be incentivized. In the latter case, the demand for nickel could not only increase due to stainless steel demand but also due to the increasing demand for nickel to be used in electric vehicle (EV) batteries.
Some EV manufacturers believe nickel demand could increase so much that they are reaching out directly to nickel producers.
For example, Tesla is in discussion with Giga Metals, a Canadian producer, to develop a large nickel mine project that could provide Tesla with low-carbon nickel for its batteries.
According to Benchmark Mineral Intelligence, nickel demand for batteries could rise to 1.4 million metric tons by 2030, or 30% of total nickel demand. Should that occur, that would represent a 30% demand increase from the current demand is about 139,000 metric tons.
Actual metals prices and trends
The Allegheny Ludlum 316 stainless steel surcharge increased 5.8% month over month to $0.84/pound. The 304 surcharge rose 5.9% to $0.65/pound.
LME primary three-month nickel rose 11.8% to $15,442.00/mt.
Chinese 316 and 304 cold-rolled coil rose to $3,137.29/mt and $2,159.63/mt, respectively.
Chinese primary nickel rose 14.0% to $17,773.13/mt. Indian primary nickel rose 12.8% to $15.62/kilogram.
FeCr lumps increased 1.8% to $1,517.57/mt.
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