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We take an updated look at alloy surcharges for stainless steel in the coming first months of 2021. Where are the trends in nickel, chrome, scrap or exchange rates going? What do relevant market analyses have to say on this subject.

Alloy surcharges expected to rise further in Q1 2021
Alloy surcharges expected to rise further in Q1 2021

Alloy surcharges: What does the market say?

The market for steel and stainless steel is currently very busy. Shortly before Christmas, supply bottlenecks for hot-rolled strip were reported from almost all parts of the world. Europe and the United States were particularly affected.

Liquidity on the market remains high. There is also continued buying interest in commodities, equities and funds. According to analysts, this optimistic mood in the market should continue for a while. Short-term profit-taking or political uncertainties may, of course, continue to put pressure on prices.

Nickel prices at record high

Nickel prices broke through the $17,000/mt mark in December 2020.

Currently (Jan. 06, 2020), they are trading at just above $17,828 on the LME. As inventories are high and will presumably continue to grow, a calming down should be expected here. Whether prices will fall, however, cannot be foreseen now.

Source: London Metal Exchange

Ferro-molybdenum prices in upward trend

Investingnews reports in their current analysis on the development of the molybdenum market 2021:

“As the new year begins, CRU forecasts that demand for molybdenum will recover, with better oil prices supporting demand strength.”

Whether the current price of around $23,500 will hold remains to be seen. Momentum had already slowed somewhat in December.

Source: investingnews.com

Ferro-chrome prices higher in Q1 2021

In Q1 2021, the European price for ferrochrome rose to $1,175/lb. This is an increase of 3.1% compared to the fourth quarter of 2020, but the price increase seems to be more due to the increase in demand.

South Africa is also planning to tax chrome ores.

Source: metalbulletin.com

Ferro-manganese fell sharply

Manganese has seen a sharp drop in prices since mid-2020. In mid-December, the manganese price fell by nearly CNY8,000/mt compared to May 2020. January 2021 manganese is currently quoted at around CNY 31,000/mt. The Trading Economics forecast indicates a downward trend until Jan 2022.

Source: tradingeconomics.com

Iron ore prices to fall in 2021

Iron ore prices are expected to fall to below US$100 per ton in the coming years. The reason for this is said to be falling margins at steel mills and rising iron ore stocks in China.

Iron ore prices started the new year with a bang on Jan 4th as unprecedented demand from China countered government calls for sharp cuts in the country’s steel production.

Sources: mining.com, stockhead.com.au

Scrap prices are on the upswing

Already in December, scrap prices were on the rise. This is due to the increased demand in the market. Countries such as Turkey in particular are reporting significantly higher scrap imports.

Prices for steel scrap are currently around $475 per ton.

Source: metalbulletin.com

Ferro-vanadium – increase in demand likely in 2021

Ferro-vanadium prices will continue to rise in 2021, according to analysts. Although many agree that there are still a lot of uncertainties in the ferro-vanadium market. Price development will be particularly dependent on crude steel production and the bar market in China.

Source: investingnews.com

Developments on the foreign exchange market

The euro is currently trading at around $1.23. And is thus stronger than it has been since April 2018.

According to the analysis, the year 2021 will definitely offer high tension for the top class of the foreign exchange market, the relation of the euro to the US dollar. Politics, economy, interest rates and for months still the factor of the Corona virus will affect this currency pair. However, as none of these factors can be narrowed down in advance, one should not try to predict where the euro/US dollar exchange rate will end up on New Year’s Eve 2021.

Source: lynxbroker.de

Conclusion

We currently expect the positive buying mood and the shortage of certain raw materials on the market to continue at least into the first quarter of 2021.

The order books of European steel producers, for example, are fully utilized until late spring. Blast furnaces have already been or are being started up again. However, it will be some time before full capacities are available again.

The partly exploding prices for domestic steel products, especially in the hot-rolled sector, are currently making imports from abroad very attractive. Despite tariffs, these represent interesting alternatives.

Do you have any questions on the subject of alloy surcharges or would you like to talk to us in general? Then please feel free to call us on +49 7642 9282851 or send us an email to info@steelnews.biz.

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