Skip to main content

Asia

Whereas chrome prices have been relatively stable, the nickel roller-coaster ride that began in  2022 has yet to reach the station.

Demand for scrap from Asia’s stainless sector was patchy and uneven in the fourth quarter of 2023. The low levels of scrap coming from manufacturing activities owing to the macroeconomic slowdown are impacting local processors’ ability to offer the tonnages requested by Asian mills. At the same time, the continued low production of stainless steel end products by mills in Asia has kept the market within a narrow range.

In last year’s final quarter, Taiwanese mills’ demand for stainless steel scrap was satisfactory, if a little weak. Imports of hot coil retreated to 50,000 tonnes in December compared to an average of around 70,000 tonnes up until the third quarter. Taiwan’s stainless end-product demand remains slow. With factory activity levels low, scrap generation also remains down, creating a balance-of-power struggle between mills and processors. 

South Korea’s stainless steel scrap demand was healthy in the fourth quarter of 2023 and seems stable at present, but there is no desire to keep large additional volumes of scrap in inventories. As Posco continues to recover from the flood-related disruption of a year ago, the country’s demand for stainless steel scrap has been stable.

For China, ongoing problems in the real estate sector have continued to drag down the overall economy, forcing down the stock markets in China and Hong Kong. Stainless steel prices have nosedived too: 304 stainless coils futures in Shanghai started October at around US$ 14,800 per tonne but fell to US$ 12,200 in late November before stabilizing at US$ 12,700 in January. Demand for stainless steel end products is varying from month to month and from sector to sector.

According to the China Special Steel Enterprises Association, the country’s stainless steel production reached 36 million tonnes in 2023 - equivalent to 60% of the world’s total output. Adding in Indonesia’s annual stainless capacity of 5 million tonnes, this gives a combined 41 million tonnes, or approaching 70% of world production. Approximately 10 million tonnes of nickel pig iron were sent from Indonesia to China to support melting operations.

In last year’s fourth quarter, Japan’s demand for stainless scrap bounced back from a low. However, its demand is not sufficient to prevent an overflow of stainless scrap into other Asian countries such as South Korea, Taiwan, India and China, albeit at a slower pace than in the third quarter of 2023. For this year’s first quarter, demand from Japan’s stainless mills should be stable, as in the fourth quarter of 2023.

Imports of stainless scrap into India have been very slow since last year’s final quarter and this trend has continued into early 2024. There are multiple factors causing this, the biggest being imports of semi-finished goods like slabs and billets to compensate the use of scrap. Prices for these materials are very attractive to the Indian mills and, according to news reports, several smaller stainless producers are also exploring the option of importing such materials in order to remain competitive.

Another factor behind this trend is higher interest rates prompting India’s stainless mills to maintain rather low scrap inventories. Owing to high costs and low returns, many of the financiers operating in the Indian market are investing their money elsewhere. With the Lok Sabha elections to be held in India this year, industrialists are taking a cautious approach towards large investments during this period of uncertainty.

Indeed, many countries - including the USA, Russia and Indonesia - are planning elections for this year, so there could be a slight impact on global business.

Meanwhile, substitute products like Zurik have had some effect on scrap buying as the stainless is sorted from the Zurik and sold to the mills on domestic payment terms with credit, so the mills prefer such items on which credit is available.

Surprisingly, there has even been a drop in the quantities of ferro-nickel and nickel pig iron imported into India since last year’s final quarter, mainly because the scrap is already available at a heavy discount to nickel.

There is also a pressure to sell finished goods as major stockists and end users are not paying high values. Furthermore, logistics costs have increased substantially in recent months, especially on shipments of finished goods to Europe and the USA. The shipping lines have increased their rates owing to additional costs and surcharges relating to the issues in the Red Sea region.

China and the Far East will be on holiday for around 10 days for the Lunar New Year; during this period, markets will be semi-open and fewer trades will take place. The hope is that the Asian market will pick up after this break.