Stainless steel prices stumble badly
Spot market quotes are 27.5% lower this month
By Tom Stundza -- Purchasing, 10/3/2007 12:38:00 PM
Stainless steel depots are full throughout North America, mills have seen new-order bookings evaporate and early autumn prices for workhorse grade Type 304 cold-rolled sheet are collapsing: Market reports from buyers show a dramatic slide of 27.5% this month to an estimated average of $3,945/net ton. That’s a $1,500 decline that comes very close to the Purchasingdata.com forecast for October spot sales of $3,932.
A report by MEPS (International) of Sheffield, England, adds that the corrosion-resistant hot-rolled sheet Type 316 price for September was $6,062/net ton , $1,232 below the price in August. October's forecast is $739/ton lower, at $5,323.
A separate MEPS analysis to subscribers of its Stainless Steel Review points out that “June 2007 was the peak month for stainless steel selling values” so that the entire second half “will prove to be a tough period for all stainless steel producers.” Of course, buyers are not upset that mills in North America and the European Union, which use the alloy surcharge mechanism to bolster sales prices, now are offering massive discounts. The MEPS report says this plan “is to attract the small amount of business available.”
Worldwide stainless steel usage is due to grow 5% per year through 2011, forecasts Sérgio Mendes, commercial and services director at Brazilian specialty steelmaker Acesita. Currently, though, he admits the stainless sector is going through a downward cycle on international markets due to a drop in apparent demand. How much is unavailable, though, since the International Stainless Steel Forum only has data posted through March.
Purchasingdata.com surveys have shown that demand for stainless steel in the U.S. has been sliding for some months and is on pace to decline by 8% to 2.92 million tons this calendar year. As posted by the Metals Service Center Institute, stainless shipments through service centers, who supply half the North America regional marketplace, have dropped 3.6% through August, dropping 3.4% in the U.S. and 7.9% in the smaller Canadian market. “That’s why service center and end-use customers are reluctant to place large orders,” says steel analyst Mike Harrowell at Merrill Lynch & Co.’s Sydney offices.
Another reason for the price slippage is the dramatic midsummer decline in nickel costs, which take 60-90 days to show up in downward stainless steel market pricing—versus 30-60 days when alloying-metals pricing are rising. The erratic nature of these prices—and their impact on stainless—is expected to continue.
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