The new year has begun as the previous one ended - under the banner of uncertainty. In the end, 2022 can be archived as a good year for the stainless steel sector; in fact, all its components were at their highest levels in the first six months. The period brought a combination of demand for finished products, high prices and profitability. And despite the steep decline recorded in the second half of 2022, it allowed almost all operators to close the fiscal year with excellent results.
The above-mentioned uncertainties that ended 2022 and began 2023 were relating to high inflation, rising interest rates, still-high energy costs and the conflict in Ukraine for which there seems to be no prospect of a resolution in the short term.
Despite all these factors and thanks to a partial reduction in energy costs, there has been a weak recovery in stainless steel production. It should be emphasized that production in Europe made a very late, mid-January start to 2023 and that, during the first quarter, some mills will stop for plant maintenance. All of these factors create little desire on the part of scrap suppliers to sell their product. In fact, values of the various components of stainless steel (Ni, Cr and Mo) remain at good levels, but the lack of strong global demand from steel mills is preventing a major increase in prices.
The policy of the European steel mills is to find scrap even outside the usual routes. It should be noted that both the importation of material from outside Europe and an exchange between the various European countries is taking place with the intention of cooling prices in those areas where there is more need for material.
This trend will certainly continue until the end of the first quarter. At this point, it will be necessary to understand whether demand for finished products will recover or collapse as a result of all the economic uncertainties mentioned above.