Commodities | Aug 08 2006
By Chris Shaw
According to steel industry consultant MEPS, stainless steel prices in the middle of next year should be fairly similar to current prices, but to suggest this means little will happen between now and then in pricing terms would be a mistake as some volatility is seen likely.
MEPS notes stainless steel prices have not yet been impacted by the recent strength in nickel prices, which has seen the cost of the metal move as high as US$26,000 per tonne in recent weeks. But prices should move higher in September and October as the nickel price begins to impact. The steel buyers have recognised this and, in the view of MEPS, are now actively restocking inventory to beat the impending price increases.
It suggests higher prices will be a global phenomenon, as North America, Europe and Asian stainless producers should be able to push through price increases in coming months. These higher prices may not last so long though, as MEPS notes forecasts for nickel prices show some weakening into 2007 is likely. LME figures support this view, as the 15-month forecast as at the end of July indicated a nickel price of around US$19,500 per tonne.
Adding to this MEPS points out real demand continues to grow more slowly than production, so next year is likely to see a reversal of the current trend and the market is likely to enter a period of stock depletion, resulting in weaker prices.
The end result may be little change between now and this time next year in terms of prices in the stainless steel market, but for traders and therefore steel companies the trick will remain staying on the right side of the expected volatility in prices in coming months.