Mills continue to adjust to general downshift in stainless demand
Apart from a few Asian countries such as India, global manufacturing has seen a significant slowdown amid central banks striving to fight inflation. Real demand for stainless steel has contracted in many regions, including Europe. Segments like consumer goods, food processing and catering, as well as infrastructure, building and construction, have been particularly hard hit by the effects of raised interest rates, tighter credit lines and consumers’ reduced purchasing power.
Major mills in Europe are reacting to the drop in stainless demand by reducing crude stainless production for the third quarter, with some implementing temporary lay-off schemes. In this environment, the strong pressure felt a year ago from imported finished stainless from the Far East has been reduced.
Although scrap demand also softened, availability has tightened significantly on the back of less new scrap entering the supply chain and lower trading activity.
Entering the third quarter, ferrous scrap and molybdenum prices have been moving sideways whereas ferro-chrome has felt significant downward pressure. Although a major surplus of primary nickel such as nickel pig iron is looming over the segment, LME nickel prices remain elevated with support from low Exchange stocks of Class I materials. Meanwhile, the metals industry is awaiting the outcome of the next court ruling over last year’s nickel trading debacle.
Looking ahead, there is low visibility towards the end of the summer period. But, with inflation declining, expectations are that major central banks will end their rate hike cycle in the autumn. Maybe this is what we have to look forward to.