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| TITLE |
Austenitic Stainless Steel Prices To Stay LOW Through 2008 |
| WRITER |
administrator |
DATE |
2008-09-08 09:32:49 |
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AUSTENITIC STAINLESS STEEL PRICES TO STAY LOW THROUGH 2008
Stainless steel prices have had a very turbulent twelve months. Since August 2007, cold rolled coil type 304 transaction values in North America have dropped by approximately $US1650 per tonne, EU figures have plunged by over $US1150 per tonne and Asian numbers have moved down by almost $US800 per tonne. Hot rolled coil and plate recorded similar declines in all regions, with the exception of Europe where basis values for plate reduced by a greater amount. A steep descent in the cost of nickel on the LME was the main cause of the decreases. Bigger falls were noted in grade 316 transaction prices.
Weakening economic conditions negatively affected the residential building sector in the west. Consequently, demand for stainless steel deteriorated significantly, particularly for strip mill products. In September last year, US and EU producers began selling in effective prices as alloy surcharges plummeted. This had little effect, however, as distributors stopped buying. Hot rolled plate demand remained strong, particularly from capital goods and energy projects.
Consumption is expected to remain low in the short term. Producers are reducing basis selling figures to fill depleted order books. The fear of additional sharp corrections in nickel prices is likely to prompt buyers to restrict stainless purchases until the end of the year. Credit constraints are also predicted to dampen end user demand further.
Export volumes from Asia to the EU are not expected to pick up until after the antidumping investigation is concluded. Output cuts by Asian mills should help to reduce oversupply in the region created by this action. However, it is not likely to be sufficient to avoid further downward pressure on transaction values. Stainless prices are forecast to continue falling through to the end of 2008. Demand from the domestic appliance sector is expected to remain weak.
Stainless steel selling values are forecast to reach the bottom of the current price cycle by the end of the year. At this point, the MEPS world average transaction figure for cold rolled coil type 304 is likely to fall to almost $US3800 per tonne. The grade 316 number is predicted to drop to approximately $US6200 per tonne.
Consumption from end users should pick up early in 2009. We anticipate that credit restrictions will ease and customers will start rebuilding inventories. Distributors in the west may look to refill depleted stock levels in preparation for traditionally stronger sales in the spring. Consequently, a modest recovery in prices is envisaged during the first half of next year. There is the potential for Asian selling figures to move up in the fourth quarter due to a slight seasonal increase in demand.
Renewed imports from Asia could hamper the recovery in the EU if the outcome of the antidumping investigation results in little or no duties being applied. This could, in turn, add upward pressure to Asian transaction values as excess material is diverted away from the local markets.
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