Commodities | Feb 02 2007
By Rudi Filapek-Vandyck
Industry consultant MEPS has issued a warning stating the price boom in the global stainless steel sector is now “under serious threat”. Nickel is a primary component of stainless steel.
MEPS believes several factors are coming together to indicate price weakness in the future.
One of such factors pointed out by the consultant is that Asian transaction prices are extremely low compared to those in Western Europe and North America. MEPS believes this is because Chinese customers are not able to pay the prices being charged elsewhere in the world. These prices are seen as artificially inflated due to the fact that speculators in the nickel market have driven prices ever higher.
In other countries of Asia, MEPS reports, the steel mills do not have established alloy surcharge mechanisms and have difficulties in recovering the escalating input costs of nickel and chromium. The result is a large disparity between prices in different parts of the world, says MEPS.
The consultant believes Asian stainless steel products, particularly Chinese, are currently being exported at “competitive prices” to all the major consuming countries. In the EU and US, distributors have built up their inventories of “competitively priced material” and they have started off-loading their inventory into the market, reports MEPS.
The consultant believes the substantial price discrepancy between Asian and EU supplies cannot be ignored and as a result of this it has detected a high degree of uncertainty in Western stainless markets.
MEPS believes both distributors and end users are reluctant to build up stocks of locally produced material – particularly in standard grades and sizes.