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Period of consolidation gives way to renewed price pressure

The sales market for stainless steel is getting more challenging: after a short period of consolidation, prices for standard-quality stainless steel began to decrease and this trend has continued strongly during quarter two, immediately ahead of the summer season. Price pressure is not coming solely from weakening demand as it has gathered further support from a structural price difference in relation to the Far East.

However, sustainability and ESG considerations will make it increasingly difficult to import NPI-based stainless into the EU. These days, end customers understand to a much higher degree the advantages of scrap-based product produced in Europe. As the reporting season has just ended, the EU’s leading stainless flat producers were able to defend a healthy EBITDA margin in their respective organizations during the first quarter, and this should continue given the individual guidance published.

Prices remain under pressure for most raw materials - including nickel, molybdenum and ferrous scrap - amid a weakening of demand and market momentum. For the weeks leading into the summer, a further decline is expected as the seasonal slowdown reduces the prospect of any improvement in demand.

Looking towards the third quarter, inflation remains a further concern. But needless to say, falling energy prices during 2023 have helped significantly in reducing the cost basis for an energy-intensive industry such as stainless steel production.