Latest situation in the stainless steel markets

The strong situation of the stainless steel markets across the world still continues in general. The markets are so strong that EU mills have difficulty in shipping materials of certain categories and sizes to Third World countries, due to the strong demand. With the high sales tonnages and the pressure of nickel prices, stainless steel prices are at high levels. For instance, the price of 304/2B cold rolled stainless steel coils of 2 mm thickness is at Euro 3,900-4,100/ton in the local EU market. The same product in the local Chinese market is at $4,400-4,500/ton, while the price of 304/2B hot rolled stainless steel coils of 4-5 mm thickness in the same market is at $3,550-3,700/ton ex-works. While these prices have not indicated many changes in recent months, the change in nickel prices is being followed cautiously by those in the market. The change in the cash buyer price for nickel, which had declined in the first week of January and then rebounded immediately in the same week reaching $35,250/ton, is surprising. The metal prices, which have gained an importance similar to stock exchange quotations, now constitute criteria which the market has to follow and adopt its position accordingly. The sharp decline in the zinc prices in the first week of January was an unexpected development in the market. As we mentioned in our previous analyses, the parallel between nickel prices and stainless steel prices is very clear. Stainless steel prices have shown a corresponding reaction to every change in the nickel prices, and then the mills have reflected these changes in their ex-works prices. Therefore, alloy surcharges may be considered as one of the important factors affecting the stainless steel prices. When we look at the Turkish local market, we see that the calm prior to the New Year has come to an end. Recently, purchases have been concluded from the Far East due to the higher prices of European origin materials. This means purchases are now concluded for 400 and 200 series materials, which have relatively weak stainless characteristics compared to series such as 304 and 306. In the local Turkish market, the sales price of ThyssenKrupp production 304/2B second quality cold rolled stainless steel coils of 2 mm thickness is at Euro 3,900/ton + VAT, while the price of 430/2B cold rolled stainless steel coils of 2 mm thickness is at Euro 1,300/ton + VAT. On the other hand, the sales price of Arcelor production 304/2B prime quality cold rolled stainless steel coils of 2 mm thickness is at Euro 3,950/ton + VAT. The elections to be held in Turkey this year, the slowdown in economic growth and the widening of the trade deficit are all indications of a critical period ahead for the country. When we look at the local market in China, we see that prices have followed a stable trend in parallel with the general calm trend worldwide. This calm state is expected to change in March. Sales have been concluded at RMB 34,700-35,500/ton ($4,430-4,540/ton) in the Shanghai region. Chinese exports to the Middle East, mainly to Turkey, have increased, and China, which has started to find many buyers in this region, is now seen as a serious threat to the EU mills due to its improving quality. In the Taiwanese market, the price of 304 series cold rolled stainless steel coils of 2 mm thickness is at NTD 144,000-147,000/ton ($4,390-4,490/ton), while that of 304 series hot rolled stainless steel coils of 3-5 mm thickness is at NTD 135,500-140,500/ton ($4,140-4,290/ton). Although lower nickel inventories and developments in the economy diminish the expectations of a slackening in prices, the fact that nickel prices are abnormally high creates the impression that these will return to their normal levels in 2007, and that stainless steel prices will also slacken accordingly. Therefore, the market will have to be followed with caution, and it is advised to be well-prepared for any sudden changes ahead.