The index value of the Stainless Monthly Metals Index (MMI) increased by 3.8% this month. This is shown by a current analysis of the agmetalminer.com portal.
U.S. producers reluctant to ramp up capacity
Demand from auto and white goods manufacturers has been strong in recent months.
For this reason, plant sales have increased. However, plants are not running at full capacity. Rather, the plants have long lead times.
This is leading to falling inventories across the US market. This trend follows several months of destocking in distribution and manufacturers’ warehouses.
This mix could challenge manufacturers to replenish their depleted inventories in the coming months. Still, given the current unstable market conditions, mills are reluctant to ramp capacity back up to pre-pandemic levels.
In the meantime, this momentum could continue to support stainless steel prices.
Reported sales of household appliances in China showed a year-on-year sales increase of nearly 10% in October this year. Meanwhile, demand for stainless steel increased by about 13% year-on-year.
However, the total production of crude stainless steel from January to June was around 13 million tons, down 6% year-on-year. A similar trend can be seen in the import data. In the same period, China imported about 91,400 tons, down 6.4% year-on-year.
This dynamic poses a conundrum, as Chinese inventories could run low in the coming months. This could further weigh on China’s stainless steel market, which is already being hurt by the proposed export tax on chrome announced by South Africa last month.
Stainless surcharges rise again
Alloy surcharges for stainless steels have risen again after a decline that followed a five-month upward trend.
December alloy surcharges for 304 will be $0.7083/lb, up $0.0440/lb from November.
Base prices for flat-rolled ss remain stable.
Producers have been able to keep pace with current market demand while meeting standard lead times. Base prices will continue to remain stable unless there is a large increase in demand.
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