Outlook for the stainless steel market

An atmosphere of calm currently dominates the stainless steel markets. It is difficult to make any prediction regarding future prices and developments in the market. What we do know, however, is that the order books of mills, such as Arcelor, Acerinox and Outokumpu, are full till the beginning of the spring of 2007. This situation creates some uncertainty in prices. Moreover, from speaking with the major traders, one understands that stagnation is expected for the coming period. Of course, the main point that should seriously be taken into account is the serious pressure of nickel prices on the overall stainless steel price. When we look at the world stainless steel market, we see that there has been a widespread rise in demand. The principal reason for this is the continued strong development of the economies of certain countries, such as China, India, Brazil, Iran, Turkey and Russia. Major companies, foreseeing that demand will naturally follow the strong activity levels in these countries, are continuing their investments. For instance, Baosteel and POSCO have made investments in China. When we look at the Turkish market, we see that the base price of European origin 304 series stainless steel coils of 2 mm thickness is at $4,900-5,100/ton for prime quality material, while the price for second quality material is at $4,100-4,300/ton levels. While base prices of European origin nickel-free 430 series material are at $2,300-2,400/ton, sales have been concluded at $1,900-2,000/ton levels. The interesting point is that Far Eastern origin thick coils can find buyers at very high levels, since the thicker the material gets, the tighter its availability becomes in the local market. Although the prices of stainless steel pipes are expected to increase in the coming period, there are also some traders who express the view that the high levels may slacken. Nevertheless, when we consider the low inventory levels in Europe, the price levels look normal. In the short term, a possible change in nickel prices may directly affect the stainless steel markets. Currently, the market is strong with the long-term sales which have been concluded. In conclusion, the high-quantity purchases worldwide, in addition to the low inventory levels, have caused prices to increase. However, by far the principal factor in the coming period that will affect stainless steel prices (now hovering at record levels) and determine the direction of market, is the price of nickel. The fact that end-users are looking for new alternatives and that new nickel investments are being made will certainly contribute to a slackening in prices. However, when this will happen is the question currently on the lips of all market players. In general, no slowdown is expected till April 2007.