How are alloy surcharges performing? Nickel broke through $18,000/mt in January 2021 and struggled to a seven-year high. Molybdenum and chrome continue to rise. And scrap prices are red-hot. In addition, the Chinese New Year is influencing price trends.
Still, the stainless steel market is pretty much in turmoil. EU steel consumers find it difficult or very expensive to get material from the EU. Stainless steel scrap is in short supply. And due to import restrictions, demand in Asia can also only be met to a limited extent.
Nickel at seven year high
Nickel has remained at relatively steady levels in recent weeks, moving between $17,300 and $18,400. It has been moving steadily upward since April 2020. And according to investing.com data (Source), it is at a seven-year high.
Demand for nickel is picking up, but this will also cause the supply side to ramp up its capacity. With rising inventories, especially before the Chinese New Year, when demand usually declines, there could still be a downward movement here. Overall, however, nickel will probably be able to hold its high. Especially the Chinese stainless steel market is predicted in the press to rise further in 2021 (Source).
Ferro-Molybdenum prices have risen since 2020
After a dip in August 2020, the price of ferro-molybdenum has risen steadily. As a result, FeMo has followed the trend of industrial metals. It is likely that molybdenum will continue to increase in price (Source).
Ferro-Chrome runs hot
According to current reports, ferro-chrome prices are currently running hot. And have increased significantly due to material shortages. In some cases by up to 46%. This has no impact on the alloy surcharge yet, but could become interesting in the second quarter of 2021 (Source | Source).
Ferro-Manganese prices rise again
As reported (Source), the price of ferro-manganese plummeted sharply in December 2020. However, it is currently recovering somewhat and has risen by 1.6% per ton since the beginning of 2021.
Prices for iron ores unsteady
After a price increase in iron ore at the beginning of 2021, the price has currently dropped again. The news on iron ore has also been quite mixed in recent weeks. The conflict between Australia and China on the subject of iron ore has certainly contributed to the increase. The now falling iron ore price, however, seems to be due to a strengthening dollar (Source).
Prices for iron ore cargoes with an iron content of 63.5% for delivery to Tianjin fell to the lowest level in more than a month near the $155 region as output from China’s steel mills continued to decline and inventories rose. Still, falling shipments from Australia, the main supplier, supported prices.tradingeconomics.com
Scrap prices glow at high levels
The market for metal scrap is currently subject to stronger movements. On the one hand, the media keep reporting falling scrap prices, while on the other hand, the market is portrayed as overheated. The special situation caused by the Corona pandemic, the shortage of stainless steel and in some cases extreme shortages of steel scrap, make an outlook difficult. It is likely that scrap prices will remain high. However, market consolidation cannot be ruled out.
Ferro-Vanadium dependent on Chinese New Year
Chinese imports of ferro-vanadium have surged since October 2020, according to Argusmedia.com. And prices have also picked up.
In the short term, it remains to be seen how China’s Lunar New Year holiday will affect prices both inside and outside China, with some market participants concerned that already limited spot supplies of ferro-vanadium in particular could tighten further as China’s activity pauses.
However, this news is from mid-January 2021 (Source).
In a recent note dated February 1, Argus writes:
Chinese state-controlled vanadium producer Panzhihua Iron and Steel (Pangang) today revised its weekly benchmark prices amid limited market activity, after increasing its reference price on January 25 due to increased buying interest from steel mills.argusmedia.com
Therefore, things remain rather turbulent here as well, with a prospect of further rising prices.
Foreign exchange: Euro softens against dollar
After standing at around $1.23 to € 1.00 at the beginning of 2021, the euro has weakened to just over $1.20 as of today.
The euro struggled to a seven-week low against the U.S. dollar on Feb. 2 as concerns about a prolonged freeze dampened sentiment toward the single currency (Source).
How the U.S. stimulus program will further impact this value remains to be seen. The stable and relatively good American economic data, could give the dollar a further boost. And let the euro weaken further.
Outlook for the coming alloy surcharges
The market for base and industrial metals currently looks like a further increase in alloy surcharges. However, some areas are showing clear indications that they could overheat and then fall – e.g. scrap metal. However, as the European steel producers in particular give the impression of wanting to continue to drive prices, we do not expect the alloy surcharge to decrease in the near future either.
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 email@example.com.
- Mar 2021: Alloy surcharges: Rapidly rising raw material prices and shortages set the trend
- Feb 2021: Alloy surcharges: Where is the rally on the metal markets heading?
- Jan 2021: Alloy surcharges expected to rise further in Q1 2021
- Dec 2021: Alloy surcharges have a strong start into 2021
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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.