Asia

Since May, LME nickel futures have been on another upward rampage, following the lead set by copper. After exceeding US$ 21,000 per tonne at the end of that month, the summer lull and the International Nickel Study Group’s forecast of a surplus this year prompted the metal’s price to slide back to US$ 16,800 in July.

In the second quarter of 2024, Taiwanese mills’ demand for stainless steel scrap continued to be slow. Imports of hot rolled coils increased from an average of 75,000 tonnes per month to an average of 85,000 tonnes for April, May and June. Taiwan’s stainless end-product demand remains weak but is recovering slowly. Mills feel the last quarter of this year will be better than the previous three quarters.

South Korea’s stainless steel scrap demand was minimal in the second quarter as several furnaces underwent yearly maintenance. These have been back online since June and into the third quarter, and so scrap demand should pick up. Stainless mills are holding decent order books for their finished goods.

China’s real estate stabilization plan is under way but, for now, prices are still said to be ticking lower such that everyone is watching to see when the bottom will be reached. This may not happen for some time and could be in the last quarter of this year or the opening quarter of 2025.

Pricing of stainless steel coils in China is range-bound, with 304 grade futures in Shanghai starting May at around US$ 15,000 per tonne and then dropping to a low of US$ 13,700 in mid-June before steadily increasing to US$ 14,200 in July. 

There was an increase in Japan’s domestic consumption of stainless scrap in the second quarter: indeed, exports remain low owing to strong home demand. A similar trend is expected for the third quarter. With higher container freight rates and vessel space issues, exports of scrap from Japan are likely to remain weak.

The Indian elections ended in June and the stainless steel industry has not seen any changes in import or export guidelines. Overall, India’s stainless steel scrap market remains slow as compared to Europe which is still commanding high prices for deliveries. Indian stainless mills’ order books for finished goods remain weak. Mills had originally thought that, by mid-year, interest rates would have begun to fall but this has not happened, making several businesses less lucrative and shrinking profit margins.

Logistics have provided the biggest headache, beginning with the Red Sea crisis in the final quarter of 2023 which has led to most vessels going around the Cape of Good Hope, thereby increasing shipping times and costs. Ocean freight rates have climbed significantly for container movements, making it very hard to conduct business. A shortage of vessel space and crazy-high freight rates which continue to rise week after week are creating serious and widespread problems, especially in Asian ports.

Furthermore, the gradual increase in nickel pig iron and ferro-nickel imports into India has eaten up a fair share of a stainless scrap trade which had been bullish up until a year ago. Zurik imports have also continued to be strong.

A few of India’s stainless mills have been regularly importing semis such as slabs and blooms. Monthly imports from Indonesia are reducing India’s demand for imported scrap. This is not a new trend and has been rampant in countries South Korea and Taiwan where scrap requirements have dropped significantly over the last two years as mills have showed a preference for alternatives like semis.

July and August are monsoon months during which maintenance is carried out and production is generally slow. Also, summer holidays in Europe will hamper sales of Asia’s finished stainless goods. Demand should build later in 2024 and the final quarter could be very positive.