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Asia

Asia’s stainless steel demand took a steep downturn in the second and early third quarters, with mills advising scrap processors and suppliers that their order books were not filling up. The outlook for stainless scrap demand continues to be weak. 

Taiwanese mills’ demand for stainless steel scrap declined from an already low level in the second quarter and entering quarter three amid the continuous inflow of Indonesian stainless hot coils and nickel pig iron which would normally head to China.

South Korea’s stainless mills had been faring better than their Taiwanese counterparts but, by the end of the second quarter and the start of the third, they were also mentioning poor demand from their customers. South Korean mills’ reduced intake of stainless scrap affects an even broader market as they consume a large share.

In China, stainless scrap demand seems healthy after COVID restrictions were lifted in Shanghai. Local market pricing of 304 stainless scrap is now on a level with the international standard. Stainless coil 304 grade futures in Shanghai have been trading in the range of RMB$ 16,000-17,000 per tonne. 

Japanese demand for stainless scrap has been in the doldrums since May. Stainless mills have reported high scrap inventories and poor demand for stainless products.

In India, meanwhile, a 15% export duty has been imposed on finished stainless products, thereby slowing demand for scrap imports as domestic mills have been stuck with several orders that they are having a hard time to execute; some mills are taking the extra loss of 15% to fulfil their export obligations. Petitions have been filed for the removal of this export duty but the government has yet to reach a conclusion on the matter. Until then, exporters will have no option but to pay it.

Nickel’s steady fall to levels below US$ 19,000 per tonne has caused mills to hold back from buying scrap given the weakness in their order books and in business prospects. The devaluation of the Indian rupee has also led to losses for scrap importers on the incoming cargoes they are receiving. With the Indian sub-continent in its monsoon season, the outlook is for a slow next month or two. Also, a few stainless plants are undergoing annual service and maintenance programmes.

Scrap pricing is painting a gloomy outlook for the stainless industry. But as the saying goes, it is always darkest before the dawn.