In the space of one to two months the scenario governing the European stainless steel scrap market has changed completely. During last week's Bureau of International Recycling (BIR) conference in Athens, the note of change was sounded and currently, at one step from the finalization of the contracts for next month's supplies, a consolidation of the changed situation appears to be evident.
We are speaking, of course, of the clear drop in the demand for stainless scrap coming from the European steel producers which, given the stellar levels of nickel quotations, have decided to vary their product mix by moving further in the direction of ferritic steels, or at any rate to steels with a lower nickel content. As a result, there has been a definite impact on the demand for stainless scrap and, after two months during which the process still appeared to be in its experimental phase, it has now become an actual fact confirmed by a decisive fall in demand. To state the truth, the Italian domestic producers have followed this course of action at a delay of a few weeks with respect to their continental European competitors, and so the process of product conversion has been a little slower. However, it is only a question of a couple of weeks' delay.
With regard to quotations, the effect of the slowdown in the demand for stainless steel scrap is difficult to quantify, and will remain so until all contracts have been signed and sealed. However, according to the market reports received the price fall has been in the range of a few hundred Euro per ton over the course of a few weeks. One trader estimated the price drop at up to Euro 500/mt, though this was taking into account the previous maximum levels and the minimum levels seen today in the market. At the same time finished product prices have lost their positive trend of recent months.
Another factor worthy of attention is the contrasting tendency of the price of stainless scrap compared to the nickel price trend observed at the London Metal Exchange. Nickel has recently ceded a few thousand dollars, though prices remain firmly settled above the level of USD 40,000/mt. Will the production of stainless of lower nickel content and the resulting fall in demand for stainless steel scrap be sufficient to impact on the price of nickel? This is perhaps impossible to say as, despite the slowdown in Europe, the global market still presents a positive picture thanks principally to the Asian region.
There is one final element to be taken into consideration. What will happen when mixed ferritic and nickel-based stainless scrap left over from manufacturing processes enter into circulation? The quantities collected will increase but "the work required to separate these steels - as one market player commented - will be more complicated and will require closer use of analytical technology, given the chemical properties of the "new" stainless steels which are now gaining popularity."