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Super Alloys

What a difference a year makes. This time last year, a robust stainless steel market had led to pricing parity with a weak superalloy market, resulting in superalloy scrap being used for nickel units in stainless steel production. Flip to the second quarter of 2022 and there has been a reversal of fortunes: stainless pricing and demand are waning while superalloy demand is improving on the back of a strong aerospace sector. This should release superalloy scrap back into superalloy manufacturing as suppliers maximize the pricing differential available.

As superalloy demand has continued to gain momentum through the second quarter and into the third, some manufacturers have reported their best order entries since 2011, mainly down to the aerospace sector as both Boeing and Airbus increase their production rates and order intakes for new aircraft.

Expectations are that this level of demand will continue throughout the rest of 2022, barring any major disasters. However, this is not reflected in the pricing of its major commodities, with nickel coming off March highs to settle below first quarter lows and with cobalt down from April highs; at the time of writing, cobalt has slumped a further 20% from its second quarter averages. Nickel is suffering from a lacklustre stainless market, while both metals are being hit by the global macro-economic concerns that dominate the headlines. Increases in inflation and rising interest rates are fundamental issues, with other factors being the ongoing conflict in Ukraine, the lag from China’s lockdowns and global logistics problems.

In summary, there is no hiding from global macro-developments. While the outlook is bullish for superalloys, we seem set for more volatility and uncertainty in commodity markets.