Global demand for stainless steel climbed more than 4.5% last year and is expected to record approximately the same increase in 2014. However, 2013 has been dubbed 'a very challenging year' for the stainless steel industry in which some 'significant casualties' were seen. Talk of expansion was largely drowned out by the need for contraction and cost-cutting.
China produced more than half of the world's stainless steel in 2013 and yet imported little scrap, opting instead to source its nickel units via nickel pig iron. Elsewhere in Asia, currency fluctuations have provided relative stability in US dollar pricing for stainless steel scrap. Stainless steel plants in Taiwan and South Korea have focused their buying activity on local scrap, thus underpinning domestic prices; in the former of these two countries, stainless steel output jumped 25% from the third to the fourth quarters of last year.
In India, meanwhile, scrap purchasers have been concentrating principally on nearby spot material at a time when domestic stainless steel producers have suffered the adverse effects of more halting economic growth, a slowdown in infrastructure projects, political uncertainty and weaker export markets.
Despite a duty reduction in accordance with World Trade Organization membership, scrap suppliers in Russia have opted to sell large tonnages on the domestic market and are likely to retain this preference so long as international prices continue to trail those prevailing within Russia - despite frequent payment delays for scrap delivered to home producers. Meanwhile, Kazakhstan has introduced a three-month ban on scrap exports to all destinations, including Russia.
In the Middle East, yards are holding on to their scrap stocks in expectation of an improvement in the nickel price. Meanwhile, the decision to award Expo 2020 to Dubai is expected to trigger a surge in demand for the 430, 304 and 316 grades of stainless steel.
Across in the USA, difficult winter weather conditions has had a deep impact on the stainless steel scrap market in the early part of the year by hampering rail, barge and truck flows to and from processors. This widespread disruption coincides with an improving business outlook for US stainless mills, although conditions are still 'far from robust'. Mills are not struggling to source the scrap they need and so have been able to maintain relatively low inventories.
The stainless steel market in Europe is still dogged by overcapacity, low prices for finished products and an absence of margin. Pressure on raw material prices is therefore expected to remain intense throughout this year.
The closure of the Krefeld works coupled with the decline in austenitic production at Bochum has led to an excess of available scrap inGermany and overcapacity at scrap yards, prompting one expert to describe the country as practically the scrap procurement 'basin' for the whole of Europe.
Meanwhile, ThyssenKrupp's decision to return to the stainless steel sector by re-acquiring AST's property has led to forecasts of good domestic demand for scrap in Italy over the next few months. With arisings generally lower than the average, dealers have been declining to sell their scrap at current price levels.
In the UK, scrap flows are reported to be reasonable relative to market demand, although demolition activity is more muted than normal. In 2013, domestic stainless steel production failed to reach predicted levels and ended up roughly equivalent to the 2012 figure; the forecast for 2014 is currently for another repeat performance.
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