BIR World Mirror on Stainless Steel & Special Alloys: Expectations exceeded in early 2023
A concise summary of the BIR World Mirror on Stainless Steel & Special Alloys – Issue February 2023. Full version with detailed market reports available in the Members Only section of the BIR website.
Upward movement in scrap prices is just one of the ways in which many forecasters have been surprised by developments at the start of this new year. According to the latest World Mirror produced by the BIR Stainless Steel & Special Alloys Committee, these early weeks have brought some strong demand for stainless scrap amid more positive news from the stainless steel sector as a whole.
China’s removal of COVID restrictions has improved the general business mood in Asia. In China itself, stainless scrap demand is extremely healthy owing to its continuing price advantage over nickel pig iron. Some mills have started to experiment with imports of stainless scrap from the international market even though the country’s Green Fence environmental laws require less than 0.3% impurities, with rejected cargoes returned to the original port of loading.
Following the halt late last year to melt shop operations at the Posco mill in South Korea as a result of typhoon-related flooding, it is reported that two of its three furnaces had been restarted by early February, although the overall market boost has been limited thus far as considerable volumes of South Korea’s domestic scrap had been held in stock for Posco. Surplus scrap on Japan’s domestic market - as well as tonnages that would have headed in the past to Posco in South Korea - has been flowing into Taiwan, as well as into China and India.
Positives in the USA include the announcement from North American Stainless (part of the Acerinox group of companies) of a US$ 244 million expansion at its Ghent facility in Kentucky that will boost the company’s production capacity by 20%. Among the other feedback from the USA is confirmation that overseas demand for US stainless scrap has been beating expectations, jumping 32% year on year in January-November 2022 to 358,000 tonnes on improved demand from Mexico, Taiwan, Canada and India. If, as widely anticipated, the US Federal Reserve winds down the pace of interest rate hikes, this could act as a further spur to capital investment and trade flows.
Upbeat news from Europe includes an end to the upward trajectory of energy costs, the milder-than-feared effects of reduced purchasing power and a drop in imports of finished stainless products, notably from Asia. As a result, capacity utilization rates among Europe’s stainless mills are described as satisfactory, although further price hikes are said to be required on stainless finished goods in order to compensate for higher costs along the production chain.
It was a slow start to 2023 in production terms, however, as many European mills resumed only in mid-January, with some stopping for plant maintenance in the first quarter.
In India, removal of the 15% export duty on stainless finished products after several months of hard lobbying by industry representatives has yet to translate into the anticipated increase in stainless scrap imports, partly because scrap prices in India have been lagging behind those prevailing in the USA and Europe. Indian mills are not very bullish despite decent order books for the next two months or so.
In the Middle East, meanwhile, destocking by distributors and service centres is likely to lead to sluggish purchasing conditions in the months ahead. That said, stainless steel prices are still higher than they were prior to the pandemic.
Superalloy manufacturers expect their order books to remain strong for the foreseeable future amid healthy aerospace demand and good performances from the industrial gas turbine and medical sectors. Molybdenum pricing has jumped to new highs, with the lifting of China’s COVID restrictions said to be a major factor. Prices are now expected to remain elevated for longer given a constricted supply.