The Stainless Monthly Metals Index (MMI) increased by 3.8% for this month’s index value.
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U.S. producers wary to ramp up capacity
Demand from automotive and white goods manufacturers has been strong in the past few months.
For this reason, mill sales have increased. However, mills are not operating at full capacity. Rather, mills have kept long lead times.
This is leading to declining inventory levels across the U.S. stainless steel market. The trend follows several months of destocking in the distribution sector, as well as at manufacturers’ warehouses.
This mix could create challenges for manufacturers to replenish their depleted stock levels in upcoming months. Nevertheless, mills remain hesitant to ramp up capacity to pre-pandemic levels given current unstable market conditions.
In the meantime, these dynamics may continue to support stainless steel prices.
Reported sales of household appliances in China this October showed a nearly 10% year-over-year increase.
Meanwhile, demand for stainless steel increased approximately 13% year over year.
However, the total output of stainless crude steel from January to June totaled around 13 million tons, a 6% year-over-year decrease.
A similar trend shows up in import data.
During the same period, China imported about 91,400 metric tons, representing a 6.4% year-over-year decline.
These dynamics present a conundrum, as Chinese stocks of stainless steel might start running low in the next few months. This might add more stress to the Chinese stainless steel market, which is already impacted by the proposed export tax on chrome that South Africa announced last month.
Surcharges rise once again
Stainless alloy surcharges have once again risen after a decline that followed a five-month uptrend.
December alloy surcharges for 304 will be $0.7083/lb, an increase of $0.0440/lb compared to November.
Flat-rolled stainless base prices remain stable.
Producers have been able to keep up with the current market demand while maintaining standard lead times. Base prices will continue to remain stable as long as there is not a large uptick in demand.
Actual metals prices and trends
The Allegheny Ludlum 316 stainless surcharge increased 6.5% month over month to $0.98/pound. Meanwhile, 304 surcharge rose 5.8% to $0.73/pound.
In addition, the LME primary three-month nickel increased 7.2% to $16,388/mt.
Chinese 316 cold-rolled coil declined to $3,144.47/mt, while Chinese 304 cold-rolled coil dropped to $2,278.60/mt.
Chinese primary nickel increased 4.1% to $18,365.54/mt. Indian primary nickel rose 6.4% to $16.24/kilogram.
FeCr lumps increased 1.7% to $1,579.83/mt.
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