BIR World Mirror on Stainless Steel & Special Alloys – Quarterly Report July 2023: Production takes a hit amid dawdling demand
A concise summary of the BIR World Mirror on Stainless Steel & Special Alloys – Quarterly Report July 2023. Full version with detailed market reports available in the Members Only section of the BIR website.
Real demand for stainless steel has contracted in many parts of the world owing to the combined effects of raised interest rates, tighter lines of credit and consumers’ reduced purchasing power. In response to these challenging conditions, major mills in Europe are trimming stainless production for the third quarter, with some implementing temporary lay-off schemes, it is reported in the latest World Mirror publication produced by the BIR Stainless Steel & Special Alloys Committee.
With less new scrap entering the supply chain and lower trading activity, overall availability has tightened significantly. One of the few potential upsides identified by industry experts is that, with inflation declining, major central banks may look to end their rate hike cycle in the autumn and thus improve the macro-economic outlook.
Across into Asia, demand for stainless steel scrap has been generally weak in the early part of the third quarter while volumes from manufacturing activities have slowed. Demand for stainless scrap among mills in Taiwan and South Korea has been at a low level while markets in China for all types of stainless raw materials are reported to be unexciting. With mills in Japan also facing thin order books and responding by reducing production, the country’s surplus stainless scrap is continuing to flow to other Asian countries, notably South Korea, Taiwan, China and India.
That said, India’s stainless steel scrap imports have been relatively slow over the last couple of months, mainly owing to mills’ poor order books and thin trading margins which have prompted many to operate at below full capacity in the recent past. Domestic prices of stainless steel scrap remain lower than international offers.
Recyclers in the USA, meanwhile, are feeling the effects of lower manufacturing output, commodity price volatility and rising interest rates. Despite lacklustre stainless steel market conditions in many parts of the country, latest US Commerce Department data reveal that exports of recycled stainless steel during the January-April 2023 period increased 69% year on year to 130,000 tonnes thanks to increased shipments to India, Mexico and Taiwan among others.
From the Middle East, it is reported that SeAH Gulf Special Steel has made a US$ 270 million investment in a seamless stainless steel pipe factory in Saudi Arabia. Once operational in 2025, the facility will have the capacity to produce 20,000 tonnes of seamless pipes and tubes annually. This investment is said to reflect the growing importance of stainless steel across various industries.
In stark contrast to the conditions facing the stainless steel sector, superalloy manufacturing has continued its vigorous recovery into the second half of 2023, with the medical and power generation markets adding support to the buoyant demand from the aerospace sector. Lead times for the manufacturing of superalloy products have extended to 12-18 months for certain alloys.
Although demand is clearly very strong, reports suggest a more challenging situation for scrap supply and pricing.
After experiencing a steep 40% decline on the LME since January this year, cobalt’s official cash price has surged 13% in July - its most significant increase since March 2022. Tightness in the market and higher demand from the medical and aerospace sectors are said to have boosted investor interest in the metal.
With contributions from its members, BIR publishes periodical commodity reports under the label "BIR World Mirror". These detailed reports exist for Non-Ferrous Metals, Ferrous, Stainless Steel / Alloys, Paper, Plastics and Latin America and provide BIR members with up-to-date information on the respective commodity or market segment.
The report on Non-Ferrous Metals appears once every two months, whereas Ferrous, Stainless Steel, Paper and Plastics are published quarterly. Latin America is covered twice per year.