Asia

Since our previous Mirror in October 2024, China has introduced two rounds of stimulus packages but neither has revived its economic situation, and so China is continuing to overproduce and to flood the Asian market with stainless steel end products.

For 2025, the agenda to be followed by the new Trump administration could mean that we see the USA pick up first before there is any possibility of a return to healthy demand for Asia. China’s stainless steel manufacturers are looking around for markets other than the USA as they understand the road ahead may be bumpy.

In last year’s final quarter, Taiwanese mills’ demand for stainless steel scrap began to weaken on competition from nickel pig iron. Imports of hot coil steadied at an average of around 80,000 tonnes per month. For the opening quarter of 2025, Taiwan’s demand for stainless end products looks to be weak. In January, stainless scrap imports are lower than for the previous three months and most of it is competitively priced.

South Korea’s stainless steel scrap demand was stable in last year’s fourth quarter but will be very weak in the first quarter of 2025 owing to furnace maintenance. There is heavy pricing pressure as well as weak forecasts for sales of finished stainless steel products, leading to the adoption of a conservative approach. 

Japan’s domestic demand for stainless scrap was steady late last year and exports have declined rapidly as its mills consume more domestic scrap; the same trend seems to be continuing in the early weeks of 2025. A fair proportion of Japan’s stainless steel scrap exports is being shipped to neighbouring countries, with logistics costs and container availability said to be problematic.

As indicated above, the market remains weak in China amid a housing collapse. There have been no major cuts in stainless output as most mills try to produce and sell more in the hope that volume will make up for small profit margins. However, this is intensifying problems not only for China but also for other countries as material floods the markets and impacts overseas producers.  

Stainless steel coil pricing in China remains range-bound, with 304 grade futures in Shanghai at around US$ 13,000 per tonne in October 2024 and dropping to US$ 12,700 before returning to where it started in January at US$ 13,000.

India’s stainless steel scrap imports have been relatively slow since December, with most mills adopting a wait-and-see approach as they struggle to secure good sales for their finished products. There was plenty of expectation surrounding the Indian government’s annual union budget but this did not yield many incentives or much support for the stainless steel industry.

Huge volumes of nickel pig iron, ferro-nickel and semis such as slabs, blooms and billets are being imported into India on a monthly basis, reducing the requirement for scrap imports in a trend which has been growing year on year. Zurik imports into India have remained steady; once sorted, the stainless scrap is offered to mills at a discount, much of it on credit terms so that it is more attractive than stainless steel scrap imports.

The new Trump administration in the USA is creating apprehension among India’s stainless manufacturers given the uncertainty around tariffs and possible trade wars in the coming months. Interest rates are high and do not appear set to come down in the short term. Since mid-January, several currencies - including the Indian rupee - have taken a hit, making it more expensive for India’s importers to pay for scrap booked several months ago and now arriving at Indian ports.

LME nickel has dropped significantly in the past month, thus negatively impacting the buying of stainless steel scrap. Container freight rates have also come down for most locations and this should help scrap movements.

Despite a lot of uncertainty around global trade, the markets are expected to pick up in late February and March this year amid reports that nickel has bottomed out and can be expected to recover soon. Overall, we feel that markets will move upwards and demand should return by the end of the first quarter.