The Stainless Monthly Metals Index (MMI) increased by 8.2% for this month’s reading.
Stop obsessing about the actual forecasted nickel price — it’s more important to spot the trend.
Outokumpu demand outlook
Stainless steel producer Outokumpu released its half-year report, reporting that their sales increased by 16.8% for the first half of 2021 compared to last year.
The company said second-quarter stainless steel demand continued to be strong.
“Total stainless steel deliveries grew by 3% and realized prices for stainless steel increased in all regions compared to the previous quarter,” Outokumpu said.
Despite a growing first half, Outokumpu expects global apparent consumption of stainless steel flat products to fall by 0.4% in the third quarter of 2021 compared to the previous quarter. The company’s outlook is based on CRU latest estimates, which anticipates a decrease in consumption of 10.5% and 0.7% in EMEA and Americas respectively, while APAC is expected to increase by 1.6%.
Moreover, Reuters reported Outokumpu CEO Heikki Malinen sees “demand for stainless steel and ferrochrome continuing to be strong and delivery volumes falling only due to planned maintenance.”
MetalMiner stainless steel expert Katie Benchina Olsen expects a tight U.S. stainless flat-rolled supply through the rest of the year. That will continue into at least the second quarter of 2022, she says. Imports into the U.S. are also limited, as demand in home markets remains strong. In addition, shipping containers are in tight supply.
This domestic environment might keep stainless steel prices high through the first half of 2022.
Nickel price surge
Similarly to copper, market fundamentals have influenced nickel prices lately.
The nickel market recorded a deficit of 42,700 metric tons for the January to May period after an approximate surplus of 92,700 metric tons for all of 2020, according to the World Bureau of Metal Statistics (WBMS). While refinery output increased, demand has outpaced refined production, thus bringing prices up.
Chinese refined output for the January to May period increased by 44,000 metric tons compared to 2020, WBMS reported. Meanwhile, apparent demand reached 564,900 metric tons (123,000 metric tons higher than in the previous year). In Indonesia, production in the first five months of 2021 rose 49% year over year and demand more than doubled.
The nickel price has increased by 19.8% in the year to date, closing July at $19,855/mt.
Be prepared to use 304 for 301, 201 and even 430 applications
Manufacturers are being forced to buy 304 at the spot price in order to keep production lines running.
For example, 301, 201 and 430 are in short supply. In the past, another service center or mill could compensate for late contract orders. However, this is no longer the case. The aforementioned 301, 201 and 430 are only produced based on contractual commitments.
When the mill is late, the only alternative right now is 304 — at a huge price premium.
Ultimately, the global stainless supply shortage will impact such products as commercial ovens, which are usually made with 430. The price differential between 430 and 304 should theoretically be around $0.65/lb at present. In reality, however, buyers are paying around $2.00/lb more for 304 on the spot market compared to the 2021 430 contract price.
Manufacturers are being forced to choose high-priced 304 to remain in production or shut down lines until the contracted material arrives.
Actual metals prices and trends
The Allegheny Ludlum 304 stainless surcharge ticked up by 4.9% month over month to $1.07 per pound this month. Meanwhile, the Allegheny Ludlum 316 surcharge surged to $1.57 per pound.
Chinese 316 cold rolled coil increased 13.0% to $4,411 per metric ton as of Aug. 1. Meanwhile, 304 cold-rolled coil surged by 17.2% to $3,359 per metric ton. Chinese primary nickel surged by 6.5% to $22,458 per metric ton.
LME three-month nickel jumped 7.8% to $19,885 per metric ton.
Indian primary nickel rose by 10.2% to $20.05 per kilogram.
Check if your service center is providing you with price transparency for your stainless spend (e.g. base price + adders).