Stainless Steel Me

stainless steel production

Several European stainless steel producers have already cut back output and are planning cuts up to 50% to try and prevent further price falls this includes ThyssenKrupp, Aperam, Outokumpu and Acerinox. The dilemma they are facing is that in reducing output they also decrease the demand for Nickel and could suffer falling surcharges.

The long term view is that by creating shortages of stainless steel this will put producers in a better position to hold prices and eventually increase. The Nickel price is expected to fall over the next couple of months but investors are ready to pounce. Based on long term growth in demand for stainless steel it’s expected that the Nickel price will bounce back. The LME price may hit a low as soon as July, then investors may look to stockpile for a later in the year when both Nickel price and stainless steel demand is expected to recover.

Many end users are withholding replacement of stocks approaching the summer months but with extended shutdowns and longer lead times we could be very close to the bottom of the price cycle, many distributors will be considering if its approaching the right time to consider re-stocking over the coming weeks ready for  growth after the main holiday period.

The long term outlook for demand is strong with Chinese steel giant Baosteel’s stainless steel unit saying it expected stainless steel consumption in China to grow 5 to 7 percent per year over the next five to 10 years.