Author Archives: Katie Benchina Olsen

The Stainless Steel MMI indicates that prices are holding fast.

This, as cold-rolled stainless imports to the U.S. have averaged above 40,000 MT per month for several straight months. Meanwhile, U.S. flat-rolled stainless producers have run at full capacity for over a year now. Still, they continue to place premiums on products they simply don’t want to make.

For NAS and Outokumpu Calvert, that category includes basically anything that is not 304, 304L, 316L 2B (or 2D) base gauge or 48 & 60 wide standard mechanicals. On the other hand, A.K. is focused on the ferritic side for automotive and highly selective about alloys that contain any nickel.

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Trouble is Brewing Among Suppliers

There are few options for supplying the volumes needed to satisfy the ongoing demand. The extra steel either needs to come from Allegheny & Tsingshan Stainless J.V.’s DRAP (Direct Roll Anneal and Pickle Line), or from imports. However, it can’t come from both.

Market manipulation from Chinese steel producers has only increased in recent years.

Steel workers in China

With CRS import levels so high, the U.S. market simply doesn’t need the tons coming from A&T Stainless’ Midland facility. Indeed, back in March, all of A&T’s December / January 232 exemption petitions for Indonesian hot band were denied.

 

The company claimed they needed “clean” Indonesian band made from nickel pig iron that was free of residual elements. However, the Midland facility previously had no issues using scrap from Allegheny bands as well as other domestic and foreign suppliers.

Concerns over Chinese stainless steel supply

NAS, Outokumpu, and Cleveland-Cliffs vehemently opposed granting A&T Stainless Section 232 exemptions. One of the main concerns was ATI’s J.V. partner Tsingshan, a Chinese military-backed steel conglomerate. Specifically, there were issues with nickel pig iron instead of scrap. On top of that, Tsingshan’s speculative actions regarding nickel almost brought down the LME.

As previously covered, no U.S. or European-based mill would have been able to do what Tsingshan did. On May 3rd, Cris Fuentes, CEO of North American Stainless, issued the following statement to MetalMiner regarding Tsingshan’s actions:

“China’s continued anti-competitive practices and blatant market manipulation at the London Metal Exchange threaten to devastate the American steel industry and its workers, weaken our national security, and slow progress in addressing climate change. As countries across the world work to limit dirty Chinese steel, Beijing has only become more manipulative. The Chinese military-backed steel conglomerate Tsingshan has built sprawling new industrial complexes in Indonesia that can produce 27 times more steel than that country uses in an entire year. These egregious cross-border subsidies (sic) lead to a costly game of whack-a-mole as American regulators struggle to keep pace. Washington policymakers must flex American muscle with new and modernized protections for steel to counter the growing threats from abroad.”

Outokumpu declined to comment.

Comments from A&T Stainless

In a request for comment, Danielle Carlini General Manager, A&T Stainless said via email:

“We are disappointed the U.S. Department of Commerce denied A&T Stainless’s Section 232 tariff exclusion requests. We believe we meet the criteria for an exclusion and had looked forward to serving the needs of the market by bringing employees back to work through restarting idled assets. The Midland DRAP line that was idled in July 2020 will remain idled at this time. I cannot comment for Tsingshan.”

Key points:

  • Allegheny and Tsingshan Stainless have not received 232 exclusions though others have
  • Brokers, master distributors, and even a large service center (which has always had a mix of domestic and import sources) have received exclusions.
  • The stainless steel MMI indicates that prices remain strong.

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The Stainless Monthly Metals Index (MMI) rose by 7.46% from January to February.

Nickel prices surged to an 11-year high last month, due to plummeting LME warehouse inventories. Prices retraced in late January after a minor sell off, but managed to rebound. As prices climb toward recent highs, they may either breakout to new levels. Alternatively, they can reject those levels and fall back within the current trading range.

U.S. producers object to A&T Stainless petitions 

Last month, MetalMiner reported A&T Stainless, the joint venture between Allegheny Technologies (ATI) and China’s Tsingshan, filed for a Section 232 exclusion for the import of Indonesian “clean” hot band sourced from the JV’s Tsingshan plant. Following the filing, U.S. producers pushed back.

U.S. producers filed objections balking at the claim that “clean” hot band (free from residual elements) was ever necessary. Domestic producers reject the argument that the DRAP line required this “clean” material.  Prior U.S. slab supply never had such a requirement.  Outokumpu and Cleveland Cliffs also argue that the Indonesian hot band contains a larger carbon footprint than U.S. material. Indonesian band uses nickel pig iron instead of stainless scrap. The exemption decision will likely come late in the first quarter after a review of the A&T Stainless’ surrebuttal.

MetalMiner’s free weekly newsletter is the easiest way to track the A&T Stainless trade case.

Stainless producers limit allocation products

Meanwhile, North American Stainless (NAS), Outokumpu (OTK) and Cleveland Cliffs (Cliffs) continue to specify the alloys and the products accepted within an allocation. 201, 301, 430 and 409, for example, remain restricted by mills as a percentage of the total allocation. Light gauges, special finishes and non-standard widths also have limits within the allocation structure. Furthermore, the allocations occur monthly so service centers and end users must fill their annual allocation in equal monthly “buckets.” NAS started to accept orders for April delivery.

Nickel price surge underpinned by low inventories

Nickel prices spiked in January to an 11-year high. By Jan. 21, LME warehouse stocks dwindled to 94,830 metric tons and primary three month nickel prices hit $23,720/mt. Prices managed to rebound during the final days of the month, but since resumed their ascent as prices chase the late-January high. In spite of the rebound, LME warehouse inventories continued to decline. Inventories now sit beneath the 90,000 metric ton mark as of the early days of February, a low not seen since 2019.

The narrowing of warehouse inventories come as nickel sees strong demand from both the stainless and emerging electric vehicle (EV) sectors. While the stainless steel sector will likely cool throughout the year, as noted by MetalMiner’s own Stuart Burns, nickel’s usage in batteries that power EVs will likely accelerate alongside the continued growth of that sector. Global electric vehicle sales more than doubled in 2021 from the year prior. According to data from Rho Motion, electric vehicles sales reached beyond 6.36 million in 2021 as compared to 3.1 million in 2020. China alone represented roughly half of last year’s sales.

If you need to track monthly metals inflation/deflation, consider signing up for our free monthly MMI report. 

In spite of the recent squeeze, prices nonetheless remain far beneath the 2007 surge. LME nickel prices reached $50,000 per ton in 2007, as LME warehouse inventories dropped below 5,000 tons. While current nickel prices remain squarely within an overall uptrend, the price remains well off the 2007 peak.

Actual metals prices and trends

The Allegheny Ludlum 304 stainless surcharge rose by 2.62% to $1.27 per pound as of Feb. 1. Meanwhile, the Allegheny Ludlum 316 surcharge rose by 2.85% to $1.80 per pound.

Chinese 316 cold rolled coil increased slightly by 1.92% to $4,315 per metric ton. Similarly, 304 cold rolled coil rose by 2.36% to $2,776 per metric ton. Chinese primary nickel jumped by 10.29% to $26,651 per metric ton.

LME three-month nickel rose by 7.71% to $22,350 per metric ton.

Indian primary nickel increased by 7.38% to $22.88 per kilogram.

 

 

The Stainless Monthly Metals Index (MMI) rose by 1.8% month over month.

January 2022 Stainless MMI chart

Although nickel edged up slowly in price, it squeezed into a wedge that is susceptible to big time frame resistance. Prices continue to consolidate within an October-November 2021 high-low price range.

A continuation to the upside with more volume from the bulls could push prices even further. Lower volume, however, could lead to price breakdowns in Q1 2022.

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A&T Stainless petitions for tariff exclusion

U.S. flat-rolled stainless supply is expected to be constrained in 2022.

However, there may be some light at the end of the tunnel.

A&T Stainless, the joint venture between Allegheny Technologies (ATI) and China’s Tsingshan, has filed a new petition with the U.S. Department of Commerce for a tariff exclusion to import 304L and 316L hot-band coils from Indonesia.

In May 2018, Katie Benchina Olsen, MetalMiner’s senior stainless analyst, examined whether A&T Stainless should be granted an exemption. At the time, NAS and Outokumpu argued that they could supply slab to A&T Stainless. The exemption was denied.

The 2022 market is different because NAS, Outokumpu and Cleveland-Cliffs are all full capacity and have customers on strict allocation.

Approval would advance capacity

If the exemption is granted, A&T Stainless would restart the Direct Roll Anneal and Pickle (DRAP) line in Midland, Pennsylvania. The line would produce about 20,000 tons a month of thicknesses .048″ and heavier. If the DOC approves the request, the DRAP line would take several weeks to start up.

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Dmitry/Adobe Stock

On March 26, ATI Metals filed an exemption to the Section 232 tariffs on behalf of its joint venture (JV) with Tsingshan Stainless called Allegheny & Tsingshan Stainless.

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In November 2017, the JV sought to produce and market 60” wide sheet in the North American market, a width ATI can no longer melt and cast due to the idling of its Midland, Pennsylvania, melt shop. Chinese company Tsingshan, the largest stainless steel producer in the world, has supplied the slab since Q4 2017 from its vertically integrated mining, refining and casting assets in Indonesia.

ATI has been converting slab using its state-of- the-art Hot Rolling and Processing Facility (HRPF) in Brackenridge, Pennsylvania, and the JV’s Direct Rolled Anneal and Pickle (DRAP) facility in Midland.

Although ATI has long supported anti-dumping and countervailing lawsuits in the United States to combat unfairly traded imports, the JV presents a unique situation.

Although the final hot and cold rolled stainless steel is produced in western Pennsylvania, the slab is currently subject to the 25% Section 232 tariff because it is of Indonesian origin. To claim an exemption from the tariff, ATI must prove that there are no viable alternatives available in the United States.

In last week’s earnings call, Outokumpu’s CEO Roeland Baan stated that they could supply slab from its Calvert, Alabama, facility, and, thus, ATI should not receive an exemption. Others have proposed that ATI could restart its 60” wide melt shop in Midland, Pennsylvania, idled three years ago.

Are these options feasible?

Read more

Price stories continue to dominate our look back at the most-read posts of 2016. Katie Benchina Olsen’s missive on why North American Stainless should hike prices was first published in late January. Stainless prices have taken off with the rest of the industrial metals since but this look back shows just how precarious the situation was for producers, who were afraid of scaring off customers with higher prices, back then. — Jeff Yoders, editor

North American Stainless (NAS), the US flat-rolled stainless market leader and the lowest cost producer, has a decision to make.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

Will NAS implement another base price increase effective in March or April? Last month, NAS, never known to be a follower, announced a base price increase which was half that of its competitors Allegheny Technologies, Inc. (ATI), AK Steel and Outokumpu Coil Americas. This meant that the only increase buyers would be paying was the less aggressive 2-discount point adjustment (approximately $0.04 per lb. increase on 304 base gauge).

Will NAS increase base prices in March or April? Source: Adobe Stock/Jovanning.

Will NAS increase base prices in March or April? Source: Adobe Stock/Jovanning.

Stainless base prices may have gone up since January 1, but buyers should still be paying a lower net price for standard 304 2B this month than they did in December. The increase on base gauge 304 was offset by the over $0.05 per lb. decline in the 304 alloy surcharge. 304 Base gauge net prices should decline in February since NAS’ February 304 alloy surcharge will be $0.3321 per lb., which is $0.0031 per lb. less than the January surcharge.

North American Stainless’ Market Position

NAS is in the best position to endure depressed stainless prices longer than any of its North American competitors, but now they are losing money, too. Acerinox, NAS’ parent company from Spain, posted a loss of over €8 million in Q3 2015, after being in the black the previous three quarters. Acerinox’s 2015 results will not be announced until February 29, but I would expect the results to be worse as alloy surcharges continued to decline through the end of 2015.

Price Hike?

I believe NAS will announce another base price increase once its March production is filled, which should be in the next week. The base prices in Q4 2015 were unsustainably low as a result of Outokumpu Coil Americas’ push to fill its Calvert mill with lower prices than NAS.

As long as mill lead times remain in check, service centers will support the domestic mills so that they can keep inventory as lean as possible while still being able to provide for the manufacturer’s requirements. My experience has been that when alloy surcharges are still declining, price increases are easier for the market to accept. Another base price increase is not only feasible for March or April, it is necessary to realign base prices to manageable levels for producer, service center and manufacturers. NAS needs to lead the next price increase and act like the market leader.

As we continue to republish our highest-rated posts of the year during the holidays, we look back at the February announcement that Allegheny Technologies, Inc., exited the commodity stainless steel business.

Knowing what we now know, and considering that stainless prices have recovered and entered a bull market, you do have to wonder if ATI made the right call. Our Katie Benchina Olsen will continue to cover the latest developments for both ATI and the stainless market in the new year. — Jeff Yoders, editor

For the foreseeable future, Allegheny Technologies, Inc. (ATI) is out of the flat-rolled stainless commodity business as well as the grain-oriented electrical steel (GOES) market.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

ATI will be focusing on global markets with high barriers to entry. As we reported last month, ATI is reducing its exposure in commodity products by idling its Midland, Pa., plant, a commodity stainless facility, and its Bagdad GOES production facility in Gilpin Township, Pa.

ATI's Brackenridge facility is the future and commodity stainless is its past. Source: ATI

ATI’s Brackenridge facility is the future and commodity stainless is its past. Source: ATI

Earlier this week, ATI reported in its earnings call a net loss of $378 million for 2015 as compared to a net loss of $2.6 million in 2014. ATI’s flat-rolled products business segment is to blame for the staggering losses. Operating losses for flat-rolled products were $242 million for 2015. For this reason, Rich Harshman — ATI’s chairman, president, and CEO — stated that ATI is taking “rightsizing actions” to return the segment to profitability as quickly as possible and “execute our strategy for sustainable long-term profitable growth.”

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Allegheny Technologies, Inc. (ATI) has decided to idle its state-of-the-art Rowley, Utah, titanium sponge plant.

Two-Month Trial: Metal Buying Outlook

Titanium sponge is a key raw material to produce ATI’s titanium products. While global titanium-sponge production has increased significantly in the last couple of years, the global industrial-grade titanium market has continued to be weak. As a result of these two factors, ATI is now able to purchase titanium-sponge in the global market at prices below Rowley’s cost of production.

Extreme detailed surface of Titanium Aura Crystal Cluster

Titanium sponge is now available at lower costs on the open market than for ATI to produce it themselves. Titanium cluster image courtesy of AdobeStock/Tomatito26.

ATI stated that it is able to procure from qualified global producers even aerospace-quality sponge under long-term agreements. ATI has entered into competitive long-term agreements with qualified producers for both standard and premium titanium sponge. The Rowley facility will be idled by the end of 2016 in a manner that allows the facility to be restarted in the future if a reopening is supported by market conditions.

ATI Consolidation

In addition to the idling of Rowley, higher cost titanium hot-working operations in Albany, Ore., will be consolidated into other operations. Read more

Rich Harshman, Chairman, President and Chief Executive Officer, of Allegheny Technologies, Inc. (ATI) emphasized in the company’s Q2 2016 earnings call last week that sales to the aerospace and defense market continue to drive ATI’s results, representing over 50% of total 2016 sales.

Two-Month Trial: Metal Buying Outlook

Harshman said, “Our aerospace market is being driven, in large part, by the growth of ATI’s next-generation mill products, forgings and castings.”

StuartsF35_500

Defense, in both the aerospace engine and airframe segments, are helping ATI’s bottom line. Source: Department of Defense.

ATI’s business strategy is heavily focused on products which are proprietary to ATI or have high barriers to entry.  Based on long-term agreements, its technological prowess and its ability to meet build rate schedules, ATI seems well-positioned to capitalize on the increased build rates in commercial aerospace.

ATI has a foothold in legacy programs for both airframes and jet engines but has also been part of the research and development for the next generation of both. ATI has been awarded 300 new parts contracts which will represent over $1 billion n new business from 2016-2020.  The long-term agreements (LTAs) will lead to significant growth in ATI’s components business in precision forgings and castings as well as in powder metal alloys, which are usually used for additive manufacturing or 3D printing. Read more

The pendulum has been swinging in the direction of the suppliers of flat-rolled stainless steel suppliers for all of this year.

Two-Month Trial: Metal Buying Outlook

Base prices have increased three times since the beginning of 2016. Stainless buyers have already been paying a steady increase in base prices in the transactional market. By now, most contract stainless buyers are at base prices higher than their prior contract period. Master distributors are extracting premiums as metal buyers scramble to fill in any gaps in their supply chains. Another base price increase is expected to be announced after the September anti-dumping duty determination on Chinese cold-rolled, flat stainless steel.

US Mills Enjoying Price Increases

The U.S. mills have the momentum to capture another base price increase. Domestic mills have strong order backlogs. Domestic lead times continue to be longer than the normal six to eight weeks. The impact of the anti-dumping and countervailing duty lawsuits against Chinese cold-rolled stainless has finally occurred.

The latest U.S. Census statistics showed cold-rolled stainless imports into the U.S. from China dropped to under 2,000 metric tons in May, compared to almost 10,000 mt in April. Other Asian importing countries have not significantly increased activity into the U.S.  Increased imports into the U.S. from Europe have amounted to less than a 1,500 mt-per-month increase.

The threat of trade cases has made many importers cautious about the U.S. market. Whether domestic or import, the metal buyer should expect to be paying higher overall prices in the upcoming months. Since publishing our July monthly outlook, nickel prices have climbed 12%.

Cover Your Volumes

Even though prices are on the uptick, stainless buyers need to ensure that their volumes are covered. Any manufacturer with spikes in stainless demand may have difficulty in procuring additional material quickly, especially in bright-annealed, polished and thicknesses less than .030 inches.

Free Download: The July 2016 MMI Report

I strongly urge metal buyers to review stainless flat-rolled requirements to ensure that adequate volumes are secured with your suppliers. Whether import or domestic sources need to be utilized, your suppliers need more transparency than ever before in your flat-rolled stainless steel needs.

Similar to copper, nickel is not metal investors’ favorite child right now. While oversupply is still and issue, only a weaker dollar and further Chinese stimulus could lift prices. However, that wasn’t the case during the month of May, driving prices down. Our Stainless MMI was no exception, falling 4%.

Two-Month Trial: Metal Buying Outlook

For the past six months, every time three-month London Metal Exchange primary nickel approached $9,500 per metric ton, prices fell short. It happened in March and again in May.

Stainless_Chart_June-2016_FNL

Recently, Russia’s Norilsk Nickel, the world’s largest nickel miner, said that in order for a sustained recovery to happen, more cuts will have to materialize. That’s a very unusual statement for a metal producer as they tend to talk up the market. According to the company, over 20% of the global nickel supply needs to be cut if we want to see a sustained recovery in prices. Read more

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