stainless steel price

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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.

Upcoming negotiation on your stainless steel buy? Make sure you know how your service centers will negotiate with you.

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.

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The headline sounds somewhat melodramatic.

But the numbers laid out in the World Bureau of Metal Statistics’s annual stainless steel report suggest the reality is not far from it.

Upcoming negotiation on your stainless steel buy? Make sure you know how your service centers will negotiate with you. 

Domination of the stainless sector

Asia in general and China in particular now dominate the stainless steel sector with the region producing 80% of stainless slab production in 2019. The largest players in the sector were China at 70% and India at 10%.

The region produced 39.5 million tons of stainless steel in 2018 and jumped to 41.9 million tons in 2019.

China led the ramp up, increasing production by 10%, followed by India and Indonesia (both up 5%). Meanwhile, others in the region — Japan, South Korea and Taiwan — declined. So, too, did Europe, which fell by 8%. The U.S.’s output also fell by 8%.

Steel consolidation drives China’s growth

It is not hard to see what is driving growth in China.

Beijing is actively pushing consolidation of the massive state sector, as a recent Reuters article illustrates.

China Baowu Steel Group, the country’s top steelmaker by output, is itself the product of a consolidation of Baoshan Iron & Steel and Wuhan Iron & Steel in 2016, plus further additions since. Baowu has now absorbed stainless producer Taiyuan Iron & Steel (Group) Co Ltd (TISCO) by taking a 51% controlling stake.

No money has changed hands, Reuters reports. The deal is valued at 14.5 billion yuan ($2.10 billion) because it is a “state-backed re-structuring.”

A controlling stake in TISCO will help Baowu achieve a goal of producing 100 million tonnes of steel per year, Reuters reports. The deal will also allow it to “enhance its overall competitiveness in the stainless steel sector,” the company said.

But analysts are reported as saying the aim is also to provide better control of market prices.

China Baowu Steel will be second only to stainless steel market leader Tsingshan Holding Group in terms of global ranking.

To gauge the size of these state-engineered behemoths, TISCO may be No. 2. However, at 4.5 million tons of capacity, it is greater than half the size of Europe’s 7 million tons stainless steel production and nearly twice as large as the U.S.’s 2.6 million tons.

TISCO alone could meet all of the raw tonnage needs of North and South America — plus the rest of the world outside of Asia and Europe, with capacity to spare.

The economies of scale and market influence such size provides is significant, not just in setting domestic prices but in setting raw material prices for constituents like nickel, chrome, and molybdenum used in stainless alloying.

China is driving consolidation reportedly to achieve better environmental compliance and “to achieve orderly market competition.”

Make of that what you will in a state-controlled, centralist economy.

Are you prepared for your annual stainless steel contract negotiations? Be sure to check out our five best practices. 

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This week, we wrapped up our Monthly Metals Index (MMI) series for the month, including coverage of the renewables sector, stainless steel surcharges and steel demand in China.

Furthermore, MetalMiner’s Stuart Burns delved into supply-side impacts on lead, copper and zinc.

In other economic indicators, U.S. housing starts surged in July — a bright spot in what has been a challenging year for the U.S. economy.

Stop obsessing about actual forecasted metals prices. It’s more important to spot the trend. See why.

Week in Review, Aug. 17-21

• China’s Huayou Cobalt will temporarily cease sourcing from two cobalt mines in the Democratic Republic of the Congo.
• Stainless steel surcharges gained for the third straight month.
• Steel demand is strong in China but is not as high elsewhere.
• Supply-side worries have offered some support to zinc, lead and copper prices.
• The European Commission has launched a new anti-dumping investigation related to flat-rolled aluminum products from China.
• U.S. housing starts surged 22.6% in July.
• Stuart Burns delved into Liberty House’s latest acquisitions in France.
• MetalMiner’s metals price landing pages offer some new features and data for carbon steel, aluminum and stainless steel buyers.
• Sohrab Darabshaw offered an update on the latest developments in the Indian solar sector.

Want more from MetalMiner? We offer exclusive analyst commentary in our weekly, monthly, or quarterly updates – all metals, no sales fluff. Sign up here.

The MetalMiner metals price landing pages (aluminum, carbon steel and stainless steel) now feature LME three-month prices set against MetalMiner’s forecast track record, in addition to “should-cost” prices.

If you’ve visited MetalMiner recently, you might have noticed some changes to our aluminum, carbon steel and stainless steel price landing pages.

The pages can be found from the homepage’s top menu under “Metal Prices.”

As of this month, visitors to these pages can now find a modified, interactive price chart modeling the LME three-month price against the MetalMiner Monthly Outlook forecast track record and including MetalMiner buy signals.

“The main idea here is to showcase savings we can make for our customers if they use our Monthly Outlook,” said Marcos Briones Alvarez, MetalMiner’s procurement forecasting data analyst.

Particularly in a time of considerable volatility, it’s important to stay abreast of what’s going on in metals markets, from capacity developments to pertinent trade news to price drivers.

Metals buying organization can generate savings year-round by subscribing to the MetalMiner Monthly Metal Outlook. 

Aluminum

In addition, on a weekly basis the pages will feature updated “should-cost” metals prices by grade, width, gauge, etc.

In short, what “should” something — 5052 aluminum sheet, for example — cost?

Maksym Yemelyanov/Adobe Stock

The Stainless Monthly Metals Index (MMI) increased by 4.4% for this month’s MMI value.

Surcharges increase for a third month

While stainless demand continues to remain in line with U.S. flat-rolled producer supply, alloy surcharges are rising for the third month in a row.

Why? The surcharge increases are again due to an increase in the nickel price.

Over the past month, the LME nickel price increased over 6% to $14,433/mt as of Aug. 6.

Similarly, the Chinese nickel price increased to $16,515/mt (or CNY 113,850/mt).

Are rising surcharges causing concern? Make sure your base prices are held fixed. See how service centers negotiate with you.

Nickel price jumps over supply fears

The Mines and Geosciences Bureau reported that Philippines nickel exports declined by 28% year on year to 102,310 tons during the first half of the year.

The export decline made waves on the LME and SHFE, where the nickel price increased.

Top producers reassured the market that no further disruptions are anticipated for the remainder of the year, despite coronavirus cases having increased since the first half of the year.

Moreover, the largest exporter of high-grade nickel, SR Languyan Mining Corp, will likely deplete by the end of this year, according to the Ministry of Environment and Natural Resources of the region. This would mean the Philippines may fail to keep up with their current exports to China, further supporting the nickel price.

Demand in China has remained high. Macquarie analyst Jim Lennon estimated Chinese mills produced 2.88 million tons of stainless steel in July, or a 4.8% year-over-year increase. High-nickel containing 300-series grades of stainless grew 17.5% year over year to 1.46 million tons in July (an all-time high).

However, Lennon still expects a nickel ore surplus of around 100,000 tons for 2020.

Some demand recovery in the U.S.

The Association For Manufacturing Technology (AMT) reported U.S. manufacturing technology orders in June increased to $346.7 million, 56% more than the previous month. June orders, however, increased just 6% from June 2019.

Orders from January to June totaled $1.69 billion in 2020, down 26% year over year.

According to the AMT, manufacturing technology encompasses metal cutting, forming and fabricating. One of the industries that saw the largest order increase was the automotive sector, which almost doubled orders from June 2019. Meanwhile, agricultural equipment manufacturers nearly quadrupled and manufacturers of HVAC and commercial refrigeration equipment more than tripled orders for manufacturing technology.

The AMT expected a similar amount of orders for the month of July as demand bounces back.

Actual metals prices and trends

The Allegheny Ludlum 316 stainless surcharge declined 1.6% month over month to $0.79/pound. The 304 surcharge rose 0.8% to $0.61/pound.

LME primary three-month nickel rose 7.5% to $13,806/mt.

Chinese 316 and 304 cold-rolled coil rose to $2,923.63/mt and $2,106.74/mt, respectively.

Chinese primary nickel rose 8.0% to $15,592.71/mt. Indian primary nickel rose 7.4% to $13.85/kilogram.

FeCr lumps increased 1.3% to $1,490.48/mt.

Make sure you are following the five best practices of sourcing stainless steel. 

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Before we head into the weekend, let’s take a look back at the week that was and some of the metals storylines here on MetalMiner.

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All the base metals have been lifted by an expected end to lockdowns and a pickup in activity, particularly in China this quarter.

The weakening U.S. dollar has added a further fillip in recent weeks.

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Maksym Yemelyanov/Adobe Stock

The Stainless Monthly Metals Index (MMI) increased by 3% this month after holding flat for two consecutive months.

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If you are a metals purchaser, it is imperative to mitigate risk and keep costs down whenever possible.

Of course, volatile market conditions can very quickly disrupt a buying organization’s approach, whether it’s due to the imposition of new tariffs, the coronavirus outbreak or the oil price plunge (just to name a few recent events with seismic impacts on metals markets).

With that said, changing market conditions require a flexible, knowledge-based approach, including knowing the best times to buy and which contract mechanisms to utilize for each market type.

MetalMiner CEO Lisa Reisman and Vice President of Business Solutions Don Hauser broke down all of the above and more during a webinar Wednesday, June 24, titled “How to Set Your Metal Purchasing Strategy in Volatile Markets.”

The full webinar recording can be listened to on demand from the MetalMiner video archive.

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The Stainless Monthly Metals Index (MMI) held flat this month.

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