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The market situation in Asia is very similar to how it was in the fourth quarter of 2021. With low demand from leading stainless steel producer China, prices are lagging far behind those in the USA and Europe. In turn, the main supplier of nickel units, Indonesia, has been forced to seek alternative homes to China, with the result that not only stainless hot coils but also nickel pig iron (NPI) have been pouring into countries across Asia, and particularly into Taiwan.

At the same time, however, nickel prices have continued on their multi-year bull run owing to growth in electric vehicle production and in all things relating to zero-carbon goals.

In last year’s final quarter, Taiwanese mills’ demand for stainless steel scrap was well below average. With the flow of NPI and stainless hot coils from Indonesia, this meant that there was more profit to be made melting NPI or just rolling the coils instead of melting stainless scrap. The situation, however, may start to change: all eyes are on China as it steps up its mega infrastructure builds once again with, for example, more high-speed rail projects announced.

Taiwan is currently importing approximately 100,000 tonnes of stainless hot coils from Indonesia each month compared to the 2021 average of 80,000 tonnes. In South Korea, where anti-dumping measures are in place against Indonesian stainless coils, mills entered full production mode from the third quarter of last year and into the final quarter, but demand showed signs of levelling off in the opening weeks of 2022 owing to the holiday period in Asia.

In China, stainless scrap demand has been twitchy and coil prices have gone up and down like a yoyo. Local market pricing of 304 stainless scrap remains below international levels while, on the Shanghai futures market, 304 stainless coils suffered a 30% drop from RMB 22,400 to RMB 16,000 per tonne between October and December but have since recovered to RMB 18,000. The reason for this was electricity shortages in China owing to, for example, preparations for the Winter Olympics and early Chinese New Year holidays, prompting domestic mills to cut production.

Japanese demand for stainless scrap was strong in the fourth quarter of 2021 but the brake was applied a little in early 2022. For the first time in five years, Japan imported more stainless scrap than it exported in 2021, but it remains to be seen whether this trend will continue.

India has handled the COVID situation very well despite its huge population. The Indian Sub-continent has been rather slow in its buying of stainless scrap and the majority of mills have poor order books. Furthermore, the new variants of COVID have resulted in restrictions that have slowed the economy. Until November last year, conditions had been very bullish in India but, from early December, mills began reducing their scrap purchases. For many grades, such as chrome steel and 200 series scrap, imports dropped more than 70% owing to high container freight rates making the business unviable. As a consequence, there has been strong demand for locally-generated stainless scrap in India because it is far cheaper than imports and sellers offer attractive credit terms.

The weak scrap import demand from India could well continue throughout the first quarter of 2022. Imports of ferro-nickel are continuing as usual but with some signs of slowing as they have been hit hard mainly by the non-availability of containers.

The Indian union budget was announced on February 1 and stainless steel scrap will continue to attract zero import duty. The decision to remove antidumping and countervailing duties on stainless steel coils from China will provide stiff competition for India’s large mills and put pressure on their finished product sales.

It is to be hoped that market conditions improve in Asia and that the pandemic is reduced in its intensity.