We had already announced it recently in a detailed article. Alloy surcharges are back and once again have an impact on the prices of stainless steel producers in Europe.
Nickel has currently decoupled from the stainless steel price and has hardly any effect on it.
The predominant challenges in procurement are and remain the stainless steel shortages in Europe and the USA and the associated long lead times.
All stainless steel producers in Europe have tightened the price screws on alloy surcharges – even if in some cases attempts are being made to conceal this with marginal reductions in individual grades.
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Nickel: Price down, no impact
The nickel price fell to around $16,000 per ton on the LME in March. Triggered by the Chinese Tsingshan Group (Source). However, this had little impact on stainless steel prices. The stainless steel market continues to be driven by general shortages and steadily growing demand from the steel processing industry, which is picking up again worldwide.
This is also reflected in the alloy surcharges charged by European steel producers. Even though there are headlines in the media that manufacturers have lowered alloy surcharges. If you take a closer look, these reductions of one (1) to a maximum of two (2) percent (%) for nickel-containing austenitic stainless steel grades are hardly significant.
One could almost claim here that stainless steel and nickel have decoupled from each other. At the very least, nickel has clearly lost importance in the alloy surcharge in the current situation.
Ferro molybdenum: Availability tight, prices still at a high level
At the end of March, an interesting article by Tim Treadgold appeared in Forbes magazine’s online presence on the question of whether China was artificially driving up the price of molybdenum (Source). And forecasts a shortfall in global availability of nearly 7.3 million kg for 2021.
Without question, the molybdenum price has risen consistently since September 2020. And had reached a current high of over $29,000 per ton in March 2021 (Source). This is still a far cry from the price spikes in 2018, 2014, and 2011, but in the canon of generally rising commodity costs, molybdenum has fit in nicely.
Ferro chrome: 32% increase in benchmark prices.
As we predicted in March (Source), European Ferro chrome benchmark prices rose 32% in March to $1.56 per pound (Source).
The serious increase was triggered by the closure of many smelters and blast furnaces in China’s Inner Mongolia. Which has led to concerns in the market about an undersupply of Ferro chrome.
This development is also clearly reflected in the alloy surcharges of European stainless steel producers. They have raised their alloy surcharges for e.g. chromium-containing martensitic stainless steels of the 400 series by up to 9%.
Scrap: Demand for scrap in the EU continues to rise
Scrap is becoming increasingly important for European steel producers. On the one hand it reduces the amount of raw materials required in steel production, and on the other it increases the number of electric arc furnaces. The demand for scrap is therefore likely to continue to play a major role in alloy surcharges in April 2021.
Foreign exchange: dollar continues to enjoy advantage over the euro
The dollar continues to enjoy the advantage over the euro. Since the beginning of March, the dollar has fallen by around 4 dollar cents against the euro and is currently trading at around $1.17 per euro. This makes imports of raw materials traded in dollars even more expensive for EU mills.
Ferro vanadium: New standards need more vanadium
Vanadium prices have increased significantly since the beginning of 2021. The price trend continued in March, with no possible end in sight. New Chinese rebar standards, for example, require a higher vanadium content. Vanadium is also becoming increasingly important for use in commercial batteries, especially in China (Source).
Iron ores: Under pressure
Iron ore has come under a bit of pressure since mid-March. Announcements by the Chinese governments to move more towards more environmentally friendly steel production and the implementation of the measures, e.g. in Tangshan and Inner Mongolia, have caused iron ore prices in China to fall by about 5.5% in March.
With the ban on imports of Australian iron ore into China and what is likely to be an extreme rainy season in Brazil this year (Source), the outlook here is difficult at the moment. However, due to the small impact of iron ore on alloy surcharges, it is also relatively insignificant.
Ferro manganese: Battle for prices
In the case of manganese, suppliers and demanders are currently engaged in a battle over prices (Source). And this has also had an effect on the price. Market prices fell at the end of March, at least on the spot market (Source). It remains to be seen whether this trend will continue or whether it is just a short-term downward correction.
Outlook for April and May: Further increase in alloy surcharges?
All stainless steel producers in Europe have in some cases significantly increased the price of alloy surcharges. Reductions in surcharges have been marginal, if at all.
Alloy surcharges are also expected to increase further in May 2021.
The dominant issues for European stainless steel consumers remain availability, scarcity and lead times. Prices have not moved downward despite a sharp drop in nickel and continue to point upward.
The stainless steel processing industry also remains hampered by import restrictions and market protection measures.
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Disclaimer: Many things here represent our opinion. Others are information from the Internet. We can therefore never claim to be correct or complete. And never base a business decision solely on the news you receive from us.