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Alloy surcharges for stainless steel appear to be set to have a strong start to the year in 2021. We have taken a look at the current and relevant market data for you.

Of course, we cannot see into the future, but we expect alloy surcharges to continue to rise in the first quarter of 2021.

Iron Ore Mining
Alloy surcharges have a strong start into 2021

Nickel

Nickel futures have risen steadily since mid-March, trading above $15,800 per tonne in the last week of November. This is due to the increased supply of nickel ore to the Chinese stainless steel sector as the Chinese economy recovers from the coronavirus hit.

Nickel has gained nearly 14% this year. However, the outlook for nickel remains difficult as Chinese stainless steel producers face high input costs and sluggish global demand.

The International Nickel Study Group Global expects nickel demand in 2021 to be 2.52 million tonnes in 2021 compared to 2.32 million tonnes this year.

Source: tradingeconomics.com

Ferromolybdenum

The current molybdenum exchange rate is approximately USD 23,000 per month. At the end of 2020, it had gained approx. 6.58% compared to the beginning of the year.

Chrome Ore

South Africa approved an export tax on chrome ore, a major component of stainless steel, with the aim of supporting the local ferrochrome industry.
Chinese buyers say they have little choice but to accept the higher costs.

China is the world’s largest importer of chrome ore and would therefore bear the brunt of the burden once the export tax is enforced. However, the East Asian country has no choice but to adjust to the price increase, as it has become impractical to source the raw material from other suppliers due to South Africa’s dominance in the chrome market.

Price increases for ores and alloys

The export tax was approved on 22 October. Although the South African government has yet to announce the rate of the export tax and the starting date, market participants indicated that the tax will probably be set at a minimum of 30% if it is to have a significant impact.

Source 1: reuters.com
Source 2: reuters.com
Source 3: metalbulletin.com

Scrap Prices

Scrap prices rose sharply from October to November 2020. This is shown in a graph of the London Metal Exchange. On 27.11. the price per tonne was $316. Thus the scrap price is at a high level.

Source: lme.com

Overall, however, October and November seem to have passed off without any unpleasant surprises, as reyclingtoday.com reports.

Source: recyclingtoday.com

Ferro Vanadium

After the collapse of the vanadium price in July and November 2020, the price has now recovered somewhat. Overall, however, it has so far remained fairly stable over the whole of 2020. As of 27.11.2020, the vanadium price is at 23.95 $/kg.

Source: investing.com

Euro Forecast: Neutral

The EUR/USD has returned to within reach of the 1.20 level, which analysts see as the line drawn by the ECB in the sand. This raises the question of whether the pair has enough momentum to break higher or whether it will fall back.

Perhaps more likely is a consolidation pause before a strong movement in one direction or another.

Balance on 30.11.2020 1.00 Euro = $ 1.20

Source: dailyfx.com

Outlook

For 2021, the OECD has predicted economic growth of approx. 5 %. The forecasts are much more positive. The United States and China, in particular, performed significantly better than expected in the first half of the year. This is probably also due to massive monetary support from governments.

If the threat from Covid-19 flattens out faster than expected, consumer confidence should pick up and the global economy should pick up sharply in 2021.

Current fiscal policy also provides a high level of liquidity. This is currently strongly fuelling stock and commodity markets. A good indication of this is that the DOW Jones briefly broke through the magic 30,000 point barrier in November.

Source: oecd.org

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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