As some market sources tell us, there seem to be local procurement problems in the Middle East for certain stainless steel commodities.
As early as the week ending March 26, 2021, analysts had repeatedly reported that buyers from the larger distributors were holding back on steel and stainless steel due to allegedly high prices.
This possibly too-long restraint may now have boomeranged and emptied the warehouses of service centers and distributors in the Middle East too quickly.
Steel shortage: conditions like in Europe and the USA possible?
Europe and the United States have been suffering for months from an increasingly dramatic shortage of steel and stainless steel. Triggered by the economy’s resurgence in the midst of the Corona pandemic. Local steelmakers are unable to meet demand. And severe import restrictions, such as those imposed by the EU Safeguard measures or the Section 232 tariffs in the United States, further aggravated the situation.
Is the global shortage coming now?
For several months, the Chinese government has been pushing ahead with a sharp program to reduce environmental pollution and steel output in China. Already, the major steel regions of Tangshan and China’s Inner Mongolia Autonomous Region have suffered harsh cuts in steel production. In some cases, entire blast furnaces, converters and smelters in Inner Mongolia have been shut down.
Some of the old steel mills in Tangshan, China, have had to operate with production cuts of 50% – for at least a year. It is estimated that this will mean a drop in output of at least 1 million tons of steel and stainless steel, which will be taken off the market. Other regions in China appear to be facing similar threats, according to market sources.
What impact will this have on the Middle East?
At the moment, there seems to be no room for lower prices in the Middle East. Even the massive drop in nickel prices of about 14% has barely moved stainless steel prices. High raw material prices, e.g. for chrome and molybdenum, have also prompted European steel producers to raise alloy surcharges by up to 9% for some grades.
Chinese steel demand remains high
Chinese steel production cuts are likely to lead to China importing even more material and further fueling international shortages. This is because Chinese demand for steel and stainless steel continues unabated.
Purchasing behavior will probably have to be adjusted
Local traders, service centers and distributors in the Middle East will probably have to adjust their purchasing behavior and see if they can still procure stainless steel at present. Before not only are some stainless steel commodities no longer available.
We at the Gerber Group have been trading in stainless steel worldwide for over 20 years. We are your experts when it comes to purchasing, import, logistics and services. Information is a vital part of this. Because only then can you and we make the right decisions. Do you have any questions? Contact us now.
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.