Stainless steel alloy surcharges for May 2023 rise - Stainless Espresso
Stainless steel alloy surcharges for May 2023 rise

24 April 2023 – Good news on stainless steel alloy surcharges for May 2023, which had risen by up to 13% at US producers last Friday. Rumours of short-time working at European stainless steel producers don’t fit with the recently released annual results for 2022. What’s going on there? And good news from the Eurozone.

Stainless steel alloy surcharges rise for May 2023

The news of rising stainless steel alloy surcharges may still have been greeted as good news by many traders on Friday. Apparently, there is more foresight there than seems to be the case with fellow players on the European side of the Atlantic.

430 rises by up to 13%

All major US stainless steel producers had raised prices for grades 304 and 430. 304 is going up by up to 1.9% for May 2023. 316L is pricing in an expected decline due to falling molybdenum prices. Whether this will improve the availability of 316L remains to be seen. For the martensitic grade 430, the alloy surcharge has even gone up by almost 13% due to the 15% increase in ferrochrome benchmark prices.

Purchasing restraint artificially created?

The struggle between the European stainless steel producers and the stainless steel processing industry and the resulting artificially created buying restraint will probably lead to an extension and possibly a tightening of the EU Safeguard measure. The wait-and-see attitude of the downstream industry, which had led to extortionate downward pressure on prices, could therefore take revenge in the very short term.

Stainless steel scrap scarcer than previously thought?

Based on the good news from the United States, we have been doing some more open-ended thinking and planning. Of course, we cannot say whether these assumptions and speculations are correct. But perhaps we may invite you to participate.

The spectre of short-time work at the stainless steel plants?

Last week, the rumour that EU stainless steel producers might declare short-time work was carried through the industry.

Capacity utilisation of 97% in 2022?

EU stainless steel mills had had to shut down their electric arc furnaces in the alleged crisis year 2022 – due to exploding energy costs. Whether this is still tenable is open to question. All you need to do is look at the recently published 2022 annual results of Aperam, for example. Aperam was able to increase deliveries in 2022 to 97% of its total annual capacity of 2.5 million tonnes of stainless steel despite the “shutdown” of EAF.

With 2.1 million tonnes of stainless steel deliveries, the Finnish manufacturer Outokumpu for 2022 hardly has to hide behind the 2021 deliveries, which were only slightly higher.

Speculation: What are the reasons for such rumours?

If short-time work is now allegedly being considered again in Europe, the problem could lie elsewhere rather than in EAFs that have been shut down and only partially restarted. The plants and machines are not likely to like the constant shutdown and restart. So that would make little sense. In any case, the manufacturers are not taking the Samaritan stance just to support prices.

Pressure on politics?

What other reasons could these rumours have now? Once again, it could be used to put pressure on legislation. There is a lot of money at stake, as has already become apparent in the past two years. Subsidies, state aid, a lot of money and the procurement and securing of raw materials and, of course, cheap energy were the focus of the steel and stainless steel producers.

Stainless steel scrap scarcer than expected?

Is it perhaps possible that EU producers are simply running out or have already run out of stainless steel scrap, which they use as the basis for their production with a share of at least 70%? There are many indications of this if one compares the total capacities in Europe with the available stainless steel scrap including imports. The share of 70% high-alloy or stainless steel scrap in the EAFs is decisive for the allocation of the free ETS certificates, 90% is needed by the producers (ferrous and high-alloy) to get money from the EU funding pots for their green steel projects.

Record sales and record deliveries

This is a topic that comes up again and again and raises questions. Especially when record sales and record deliveries from 2022 are reported for EAFs that have been shut down and are now again being used to justify a non-transparent and uncertain pricing policy. Have EU manufacturers simply driven themselves up against the wall?

Eurozone Purchasing Managers Index more positive than expected

The resilience of the Eurozone continues at the beginning of the second quarter. This is indicated by the estimate of the cross-sectoral Purchasing Managers’ Index, which for April exceeded analysts’ expectations with a surprising increase of 0.7 points to 54.4. Together with positive news from the banking sector and a positive reporting season from the United States, the economic development is already looking much better.

Capital goods manufacturers make good profits

In the still young reporting season, the majority of European capital goods manufacturers have so far exceeded expectations. The companies benefited from the fact that their supply chains recovered quickly and they were therefore able to work off their full order books more quickly than expected. In addition, the costs of raw materials and transport have fallen. Due to the high order backlogs, the companies should continue to generate decent profits in the coming months.

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