In turbulent times, the value of listening to experts share their reliable data and insights cannot be overstated. In going about our day-to-day business, we are generally focused on problem-solving and the here-and-now of market circumstances rather than dwelling too much on what lies some way further down the road. However, a longer- term view is always interesting, often enlightening and can help inform our decisions when plotting the course ahead.

And so it was highly appropriate in last year’s challenging business environment to have guest speakers at our meetings who really lifted the lid on latest market developments and provided us with at least some vision of what was likely to confront our businesses in the short to medium term.

At our most recent meeting, held in Budapest last October, Natalie Scott- Gray of INTL FC Stone Ltd suggested stainless steel production in 2019 would be below the average for recent years but still acceptable in the light of a more depressed world economy. Subsequent data from
the International Stainless Steel Forum (ISSF) for the first nine months of last year reveal a year-on-year increase of 3.4% in global melt shop production despite significant declines across Europe, the USA and most of Asia.

These data support the contention featured in our final Mirror publication of 2019 that Chinese-led production of stainless steel – especially in Indonesia – has blossomed largely at the expense of producers elsewhere in the world through a seizing of their market shares. Indeed, Ms Scott- Gray insisted that Indonesia would become the dominant force in the stainless steel market at some future point.

Of course, when mills’ market shares and profitability are under pressure, their immediate reaction is to look for ways to cut costs. We can certainly confirm from personal experience in Europe that our customers were applying relentless downward pressure on our scrap prices during the course of 2019.

Ms Scott-Gray also predicted that stainless steel demand would jump by 16% over the coming five years. Again, more recent figures – released by the ISSF last October – confirmed that stainless steel consumption was on course to increase by 2.4% for 2019 as a whole, exactly half the growth recorded in the previous year. For 2020, however, the ISSF expected the pace of consumption to quicken once again for year-on-year growth of 4.4%. Interestingly in light of earlier comments, consumption growth is forecast to be particularly healthy in China this year at 7.2%, with far lower gains anticipated for the rest of Asia (+2%), the Americas (+1.6%) and Europe/Africa (+0.4%).

In Budapest, we had the benefit of hearing from Olivier Masson of Roskill Commodity Research, Consulting & Events. He offered us encouragement through his suggestion that the USA, Europe and India were likely to maintain their firm reliance on scrap for stainless steel production.

At the same time, however, he pointed out that the major growth centres of China and Indonesia were heavily geared towards the use of nickel pig iron as their major raw material.

In Singapore, guest speaker Robert Messmer of Steel & Metals Market Research revealed an intercontinental trading share of 8% for stainless steel scrap in 2018, with the bulk of this volume destined for Asia and mainly India.

And while he hailed scrap as the lowest cost option, he also acknowledged that our raw materials had scope to suffer further price declines. This is despite the fact that, in the process of making stainless steel, scrap produces less slag and leaves a smaller carbon footprint when compared to ferroalloys-based production.

The bottom line, therefore, is that some countries will continue to make scrap their raw material of choice for stainless steel production; in general, unfortunately, these countries are losing market share to nations where scrap is not so favoured. So even though the outlook for global stainless steel demand remains extremely positive, many of us can expect yet more difficult years ahead.