Stainless Steel

The Stainless Monthly Metals Index (MMI) increased by 7.0% for this month’s reading, as the ATI strike entered its seventh week this week.

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ATI strike continues

In late March, the United Steelworkers union announced a strike at nine Allegheny Technologies Inc. (ATI) facilities. The union cited “unfair labor practices” in its announcement of the strike.

Over six weeks later, the labor stoppage has yet to reach a conclusion.

Meanwhile, late last month, ATI reported its first-quarter financial results. The firm reported a net loss of $7.9 million for the quarter, compared with a net loss of $1.1 billion in Q4 2020.

In Q1 2020, the firm reported net income of $23.6 million.

In its earnings report, the firm expressed “disappointment” in the union’s decision to strike.

“While we are incredibly disappointed that the USW leadership decided to strike our Specialty Rolled Products locations beginning in late March, we remain committed to our business continuity plan to safely operate in a way that allows us to deliver to our customers on our quantity and quality commitments during this strike,” President and CEO Robert S. Wetherbee said. “Our operating teams are committed to minimizing the operational interruption and financial impact from the strike as we seek to reach a fair and equitable settlement with our striking workers.”

Meanwhile, in a bargaining update released Thursday, May 13, the union said it had not heard back from ATI management regarding a proposal it made May 6.

“The issue of profit sharing has been a subject of discussion throughout our negotiations with ATI,” USW said in the statement. “We have shown the company that we are willing to be flexible, but the current offer by ATI eliminates profit sharing and replaces it with 3% wage increases in the 2nd, 3rd and 4th years of the contract. After going without a wage increase since 2014, obviously such an offer is unacceptable.”

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Last month, the MetalMiner team hosted a webinar on commodities and buying strategies for bullish markets — this month, the team will zero in on the stainless steel market.

In last month’s 30-minute session, the MetalMiner team covered metals broadly. Participants weighed in via poll questions, including about their most budget-busting metals, among other questions.

For what it’s worth, 44% answered carbon steel. However, stainless steel came in second at 24%.

In short, stainless steel buyers are feeling the pain in what is a difficult market.

Stainless steel webinar, Thursday, April 29: ‘Turning Stainless Market Upheaval to Your Advantage’

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In a webinar scheduled for 11:30 a.m. CDT, Thursday, April 29, the MetalMiner team will shine a spotlight on the stainless steel market.

The webinar, titled “Turning Stainless Market Upheaval to Your Advantage,” will features insights and tips for stainless steel buying organizations, particularly in what has been a tumultuous time for the market.

Meanwhile, as MetalMiner has reported previously, the United Steelworkers union in late March announced a strike at nine Allegheny Technologies Inc. (ATI) facilities. As of press time, the strike continued into its fourth week.

The Stainless Monthly Metals Index (MMI) dropped by 10.4% for this month’s reading, as the ATI strike continues into its third week.

Do you know the five best practices of sourcing metals, including stainless steel?

ATI strike continues

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The United Steelworkers union’s strike at nine Allegheny Technologies Inc. (ATI) facilities continues into its third week this week.

As we noted late last month, the union announced the strike at nine facilities, citing “unfair labor practices.”

“We are willing to meet with management all day, every day, but ATI needs to engage with us to resolve the outstanding issues,” USW International Vice President David McCall said in a prepared statement March 29. “We will continue to bargain in good faith, and we strongly urge ATI to do start doing the same.

“Through generations of hard work and dedication, Steelworkers at ATI have earned and deserve the security of a union contract. We cannot allow the company to use the global pandemic as an excuse to reverse decades of collective bargaining progress.”

Meanwhile, ATI expressed disappointment in the move.

“Last night, ATI further improved our proposal in hopes of averting a work stoppage,” ATI spokesperson Natalie Gillespie wrote in an emailed statement. “With such a generous offer on the table — including 9% wage increases and premium-free health care — we are disappointed for this action, especially at such an economically challenging time for ATI.”

The Tribune-Review reported ATI has called for the union to allow workers to vote on the company’s contract offer.

Late last year, ATI announced plans to exit the standard stainless steel sheet market by mid-2021. As such, stainless buyers already had to develop alternative plans if they were ATI customers. The current ATI strike presents another point of disruption for buyers.

Katie Benchina Olsen, MetalMiner senior stainless analyst, indicated earlier this month that lost production from the strike would be difficult to fill.

“Neither NAS nor Outokumpu have the capacity to undertake filling in for the ATI strike,” she said. “My opinion is that we may see some manufacturers run out of metal or have to substitute with another stainless alloy or maybe even another metal.”

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The United Steelworkers union Monday announced a strike at nine Allegheny Technologies Inc. (ATI) facilities, citing what it calls “unfair labor practices.”

The ATI strike, which began at 7 a.m. EDT Monday, marked the first at ATI since 1994, according to media reports.

• Pennsylvania in Brackenridge, Latrobe, Natrona Heights, Vandergrift and Washington
• Lockport, New York
• Louisville, Ohio
• New Bedford, Massachusetts
• Waterbury, Connecticut

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USW announces ATI strike

“We are willing to meet with management all day, every day, but ATI needs to engage with us to resolve the outstanding issues,” USW International Vice President David McCall said in a prepared statement. “We will continue to bargain in good faith, and we strongly urge ATI to do start doing the same.

“Through generations of hard work and dedication, Steelworkers at ATI have earned and deserve the security of a union contract. We cannot allow the company to use the global pandemic as an excuse to reverse decades of collective bargaining progress.”

USW said negotiations with ATI began in January 2021. The union claimed the company “sought major economic and contract language concessions” from its roughly 1,300 union members. Furthermore, the union said members have not had a wage increase since 2014.

Meanwhile, the union had announced its intention to strike Friday, March 26.

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The Stainless Monthly Metals Index (MMI) rose by 4.3% for this month’s reading, as news of a supply deal by China’s Tsingshan Holding Group helped push the nickel price downward.

Sick of not finding good price indexes for stainless steel? Check out the MetalMiner stainless steel should-cost model — detailed price-per-pound info for grade, form, alloy, gauge, width, cut to length adders, polish and finish adders.

Nickel price falls on Tsingshan supply deal news

The nickel price, like most other base metals, surged through the first two-thirds of February.

The LME nickel price reached as high as $19,722 per metric ton as of Feb. 21.

From there, however, the price dropped, particularly after news of supply deals by China’s Tsingshan Holding Group.

Tsingshan will provide a total of 100,000 metric tons of nickel matte to Huayou Cobalt and CNGR Advanced Material, Reuters reported.

“Nickel’s narrative has largely been predicated on a shortage of battery-grade metal driven by EV demand,” MetalMiner’s Stuart Burns explained earlier this month.

“However, Tsingshan’s supply contract and capacity announcements suggest there will be sufficient supply. As a result, the nickel market reflected a sharp rethink of the deficit view.

“Demand undoubtedly remains robust for nickel. Its medium- to longer-term outlook remains positive on the back of stainless and battery demand.”

A price drop at some point was expected.

“It’s expected that the market would see some price corrections,” MetalMiner CEO Lisa Reisman explained. “Now we are looking closely to see if prices break support levels or hold. Most of the base metals appear to have held onto their support, with the exception of nickel.

“However, the falling nickel price will not result in more availability or shorter lead times. In fact, more fabricators and OEMs have started to pursue import options to help alleviate supply chain hiccups.”

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Stainless steel producers have been caught in a pincer movement over the last year of rising nickel prices but falling demand.

It is a counterintuitive situation until you factor in China’s stainless production. Chinese output rose by 4% in the third quarter of last year compared to the rest of the world, which fell by 9%. The disconnect between China and the rest of the world is driving a complex dynamic in the nickel market.

The result is rising LME inventory of refined metal while, at the same time, prices are pushing close to 17-month highs at $18,675 per metric ton, Reuters reported.

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

China’s history of nickel imports

Historically, when China’s stainless producers are running hot they suck in refined nickel imports (much as they have done over the last year on aluminium and copper).

But in nickel’s case, the imports are booming for raw materials, nickel pig iron (NPI) and ferro nickel (FeNi), due in large part to Indonesia’s export ban on ores and the resulting investment made in NPI production in Indonesia by Chinese producers.

China’s imports of NPI and FeNi have boomed. Imports totaled 3.4 million tons in 2020, up 80% from 2019. Indonesia made up the lion’s share of those imports. China imported 600,000 tons from the country in 2018 and 2.7 million tons in 2020.

Ores and concentrates, by comparison, have fallen with the Philippines and New Caledonia unable to make up the shortfall. As such, imports have slumped by 30%.

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The Stainless Monthly Metals Index (MMI) increased by 4.5%, as stainless flat rolled base prices continue to move upward due to extended lead times and limited domestic capacity (following a similar trend with steel prices).

Stainless steel producers raise prices

Stainless steel producers North American Stainless (NAS) and Outokumpu announced price increases effective for February deliveries.

Both producers announced a two-discount-point reduction for standard chemistry 304, 304L and 316L. For 304, the base price increase amounts to approximately $0.0350/lb.

Outokumpu diverged from NAS, as it increased all other 300 series alloys, 200 series and 400 series by reducing the functional discount by three points. In addition, Outokumpu also will be implementing a $0.05/lb adder for 21 gauge and lighter.

As the only producer of 72″ wide in North America, Outokumpu increased its 72″ wide adder to $0.18/lb.

Along with rising base prices, alloy surcharges are rising for the third month in a row. February alloy surcharges for 304 will be $0.8592/lb, an increase of $0.0784/lb compared to January.

Both NAS and Outokumpu are also revising their equalized freight rates, which take effect in March.

Are you under pressure to generate stainless steel cost savings? Make sure you are following these five best practices. 

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A budgetary proposal by the Indian government to reduce steel duties has divided the Indian steel sector.

India proposes reduction in steel duties

In her 2021 budget speech presented in parliament earlier in the week, Finance Minister Nirmala Sitharaman proposed reducing customs duty on imports of semi-flat steel. She proposed cutting the duy for the steel, used to make ships, bridges, line pipes and other equipment, from 12.5% to 7.5%.

Furthermore, the customs duty on longs — used to make rails and wire rods — may also be reduced from the present 10% to 7.5%.

Another proposal called for revoking anti-dumping and countervailing duties on straight length bars and rods of alloy steel, high-speed steel of non-cobalt grade flat-rolled product of steel, plated or coated with an alloy of aluminum or zinc.

At least initially, the move could be interpreted as India opening its doors to cheaper steel and reducing the tax on shipments of the alloy amid surging prices at home.

The chief executives of some of global steelmakers such as JSW and Tata Steel have opined that this would not allow any increase of flow in these steel items. Meanwhile, others fear it will have a negative impact on the profitability of domestic players.

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

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Stainless steel prices in Asia have plateaued for now.

But most suggest this is a temporary slowdown in advance of the Chinese New Year holidays.

Thereafter, the market is likely to continue its relentless rise of the last two years.

China stainless steel market ramps up output

According to ArgusMedia, China’s production, imports and consumption of stainless steel all rose in 2020. China produced 30.14 million tons of crude stainless steel in 2020, up by 2.51% from 2019.

Despite significantly higher nickel prices, output increases favored nickel bearing 300 & 400 series and even duplex stainless steel with only non-nickel-containing 200 series declining.

Meanwhile, imports surged to 1.81 million tons, up 61.33%. Much of those imports came from Indonesia, where Chinese firm Tsingshan Holding Group has a new mill. As such, imports from Indonesia rose 24.3% year over year to 1.1 million tonnes in the first nine months of 2020.

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Declining exports

Exports, on the other hand, declined. Trade disputes between China and the United States, the European Union, Japan and South Korea led to the imposition of duties on shipments.

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The Stainless Monthly Metals Index (MMI) increased by 5.3% for this month’s index value, as this month we touch on Chinese stainless production, South Africa’s proposed chrome export tax and more.

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

Chinese stainless steel market

The Stainless Steel Council of China Special Steel Enterprises Association anticipated domestic stainless steel production to increase by 2.1% at the end of 2020. The increase would bring total output to more than 30 million metric tons.

High demand incentivized production. Apparent stainless steel demand for 2020 is expected to rise by 6.4% to 25.5 million metric tons.

Besides producing stainless steel, China also imports significant quantities.

Most stainless steel imports come from Chinese mills in Indonesia such as Tsingshan Holding Group. China imported 1.1 million metric tons of stainless steel in the first three quarters of the year, a 24.3% increase compared to 2019.

Furthermore, China exported 2.37 million metric tons during the same period, a 12.4% decline from 2019.

South Africa chrome export tax

The world’s largest chrome producer, South Africa, proposed an export tax on chrome ore.

The export tax could have a significant impact for China, as 83% of its chrome ore imports came from South Africa in 2019.

The chrome export tax aims to incentivize the production of ferrochrome in South Africa. However, building or expanding chrome smelter capacity in South Africa could be challenging in the country, as smelters are highly power intensive.

The country already battles with unreliable electricity supply, which makes production more costly.

If South Africa approves the chrome export tax, stainless steel prices could go up as production costs rise.

The chrome export tax is not likely to impact stainless steel prices in 2020. However, the tax may have an impact on the first quarter of 2021.

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