Stainless Steel Market Update
In the recent period from July to August, we saw a small rise of 0.32% in the Stainless Monthly Metal Index, indicating a somewhat stable trend. However, it’s notable that nickel prices have been on a general decline, despite being relatively flat this month.
Weak Demand for Stainless Mills
The landscape for the stainless steel market appears quite weak, and there’s not much indication that this will change soon. Recent financial results from suppliers in the second quarter suggest some improvements due to tariffs, but U.S. service centers are still facing tough market conditions.
For instance, Acerinox reported a 10% increase in EBITDA from the first to the second quarter. They attribute this to favorable U.S. tariff regulations, which have shielded factories from international price competition. Yet, they cited “low performance in the European market” while noting stability in U.S. orders.
Conversely, Outokumpu, feeling the effects of European market conditions, faced a 17% EBITDA drop in the same timeframe. They pointed to ongoing challenges from low demand, cheap imports from Asia, and rising energy costs. The company is calling for increased protective measures, like carbon border adjustments, as U.S. tariffs are shifting stainless trade to other regions, particularly Europe.
Rising Deliveries in the U.S.
In the U.S., Outokumpu’s stainless steel deliveries rose by 7%, indicating there’s a decent demand for domestically produced stainless. Acerinox is also increasing its North American capacity, although its global production saw a slight dip of 2.34% from the previous quarter.
Looking ahead, Outokumpu anticipates a decline in stainless steel deliveries for the third quarter, estimating a drop of 5-15% compared to Q2, primarily due to seasonal factors and weak markets in Europe. While there was some coastal supply drive among U.S. manufacturers in the second quarter, demand recovery in the U.S. still hasn’t emerged, which might suppress third-quarter results when compared to the first half.
Service Centers Report Softer Results
Amid this weaker demand, U.S. service centers aren’t experiencing the same uplift as mills. Ryerson reported a 2% drop in average selling prices for stainless steel during the quarter, implying they had to offer discounts to sell materials, harming their profit margins. Shipments also fell by 1.6%, suggesting buyers are hesitant.
Reliance similarly reported a 0.7% decline in stainless steel sold and a 2.8% dip in overall sales. Again, like Ryerson, they face pressure from low stainless prices. However, there’s a hint of optimism, as Reliance believes recent factory price increases might positively impact stainless prices in the upcoming quarter, although past months have shown little improvement.
Customs Duties and Price Support
Turning to duties, recent updates indicate that customs tariffs have allowed factories to enhance their U.S. capacities, especially in the ferritic category, while focusing on common grades like 304. Interestingly, imports of cold-rolled stainless steel into the U.S. are expected to rise throughout 2025 in comparison to 2024.
Currently, steel tariffs are set at 50%, but ongoing trade negotiations with countries like the UK and the EU remain unsettled, raising the possibility of future quota arrangements. Additionally, remarks from Trump indicate that another tariff disruption might be on the horizon.
Future Tariffs?
On August 15, Trump suggested that new tariffs may be announced soon, including those concerning steel and semiconductors, though specifics remain vague. His comments leave us guessing about potential increases or extensions of current tariffs on various products, which could indirectly affect the stainless steel market.
Part of his strategy has focused on bolstering domestic metal producers, yet manufacturing conditions are lagging significantly, and changes to tariffs may be on the table. However, higher tariffs may not necessarily improve demand; they could just further diminish it, given that manufacturers are already facing tightening margins.
Uncertain Future for Nickel Prices
As for nickel prices, they remain quite soft. While the base price appears stable for now, the historical trend indicates a downward trajectory. Nickel inventories are notably high, especially in Indonesia, which has seen significant production. However, the excessive global oversupply of nickel means that smelters will likely need to reduce output for a considerable time to meaningfully affect prices.
Market Summary
In summary, while the market sees some fluctuations, the overall predictions are mixed, leaving many questions about the future of stainless steel and nickel pricing. I guess we’ll just have to see how this unfolds.
- As of August 1, Chinese ferromolybdenum prices rose sharply by 10.95% per metric tonne, adjusting to $35,924.
- The price for the 316L Cold Roll Stainless Coil saw a 3.57% increase per pound, now at $1.45.
- China’s primary nickel price dipped by 1.16% to $16,756 per metric tonne.
- LME Primary 3 Month Nickel prices decreased by 1.13% to $15,025 per metric tonne.
- India’s primary nickel price had the largest drop, declining by 1.56% per kilogram to $15.20.
