The scarcity of nickel and its rising cost are also creating a sense of hysteria in the prices of stainless steel. How long will this gallop of nickel prices and its effects continue? The issue was discussed by Fausto Capelli (Centro Inox), Achille Fornasini (Isfor 200), Markus Moll (Steel & Metals Market Research), Thomas Pauly (Euro Inox) and Gaetano Ronchi (Ikea) at the round table discussion entitled, “The stainless steel market: the impact of nickel on production and consumption”, chaired by Luca Veronesi at Made in Steel 2007 held in Brescia at the end of last week.
In the course of the past year, Nickel has entered an ascending curve which has lifted it to heights never before explored. Last week, cash quotations for nickel reached US$50,600/mt. Issuing a warning to all players in the sector, Achille Fornasini stated, “All the conditions are in place for a downward correction of prices. While admitting that the time and extent of the price drop remained unknown, Fornasini declared, “There will definitely be a drastic reduction in the price of nickel.”
The Italian market is very interested in developments regarding nickel since the country produced 1.5 million mt of stainless steel in 2006 and is in first place in Europe for per capita apparent consumption of stainless steel. Due to its high consumption of stainless and the vertiginous rise in nickel prices, the Italian market is considering alternatives to the classic 300 series stainless steel. On this issue, Fausto Capelli stated, “The continuous search for innovation has meant that researchers have replaced the classic stainless steels with alternative materials.” Indeed, in certain sectors, the 300 series is useless for some applications. Capelli added, “One must however pay attention to the certification of these products.”
Thomas Pauly (Euro Inox) who shared Capelli’s view, declared that ferritic steels could replace austenitic steels without any loss in the desired qualities. He stated, “In recent years, many efforts have been made to replace the classic stainless steels with other materials,” going on to add that ferritic steels now had a diverse range of usage in household electrical goods, boilers, water heating appliances, etc. “These materials have a corrosion resistance equal to that of stainless steel. Producers have also improved them from the point of view of esthetics.” Pauly went on to say that the use of duplex steels was also possible: “It is wrong to think that duplex steels can be used only for heavy structures. Thanks to the innovations seen in this material also, it has been produced in more efficient ways so as to allow a multiplicity of applications.”
Gaetano Roche also spoke along the same lines, expressing the wish for a change to other materials. He said that even if there is a correction in nickel prices, it will only be a drop to medium-to high levels, meaning that there would still be a need for an alternative.
And in this scenario what role does China play? The output of stainless steel from China is on a continuous rising trend. In this context, Markus Moll (Steel & Metals Market Research) commented, “In 2006 Italy bought 200,000 metric tons of flats from China, becoming Europe’s biggest importer of flats from the Chinese...in longs, Germany has become China’s best partner, importing 70,000 metric tons.” According to Moll, the quantities of Chinese stainless steel sold abroad in 2007 will be maintained at around one million metric tons, out of six million metric tons produced. He continued, “The Chinese market is growing and the price difference between China and Europe is getting slimmer. The gap in quotations cannot be explained by the low labor costs in China insofar as raw materials and energy costs have a higher impact on producers’ expenses.” Moll also predicted that Chinese imports of stainless steel from Taiwan and Korea would decline, and that these two countries would be obliged to search for other markets.
Moll also warned of the risk of overcapacity in China and other Asian countries, saying that countries in the east were building new steel mills, modernizing existing plants and that there were also other projects in the pipeline which would further increase production capacity.