Stainless steel market stabilizes further, buying mood rises - Stainless Espresso
Stainless steel market stabilizes further, buying mood rises

25 April 2023 – The global stainless steel market continues to stabilize and buying mood is rising. This is reflected among other things in larger orders from Europe to Asia, stable raw material costs and further rising prices due to shortages in China. Thyssenkrupp and CEO part company – financial investor wanted to pay only 1 euro for steel division. And markets are increasingly in a better mood.

Stainless steel market stabilizes further, buying mood rises

Market sources report that Asian stainless steel mills have been able to collect major orders from Europe. In recent days the market had already begun to stabilize significantly following a rise in stainless steel prices in China. In addition, Chinese spot prices for stainless steel increased last week. Among other things, this was due to very low inventories at the distributors and traders, who therefore had to replenish their stocks.

Raw material prices stable and rising

Nickel pig iron and stainless steel scrap prices are currently rising or holding steady. Molybdenum prices have also picked up significantly since last week and have risen by more than 20%.

Thyssenkrupp replaces CEO

After a financial investor offered only the obligatory euro for Thyssenkrupp’s steel division at the end of March 2023, it seems that the German steelmaker was no longer happy with CEO Martina Merz. According to the Group, Merz has asked for her contract to be terminated by mutual agreement, but there are indications that this possible sale may not have met with the approval of the Supervisory Board and the IG Metall union.

Separation from steel division almost impossible?

Germany’s biggest steel producer has been trying unsuccessfully to divest its steel business for 25 years. The company has already had to be rescued from bankruptcy several times with taxpayers’ money. A takeover of the loss-making steel business by an investor would not only entail pension liabilities in the billions, debts and employment guarantees demanded by the works council, unions and politicians, but also billions of euros of investment in the green transformation, which Thyssenkrupp is unlikely to be able to finance from German taxes and EU subsidies alone.

“…promising talks have been initiated with possible partners for making Steel independent. In the phase now ahead, the focus is on financial expertise and further improving performance. That’s where additional commercial expertise will certainly be useful.”

Source: thyssenkrupp, 24 Apr 2023

Conflicts within the group?

In the Group’s press release, the quote from the outgoing CEO then also sounds rather as if the euros offered by the financial investor were not enough. Whether the designated new CEO of thyssenkrupp will have the expertise to resolve this conflict remains to be seen.

“How high the expertise has been so far was seen when the Group sold its cash cow (TK Elevator),” Thorsten Gerber, CEO of Gerber Group, said today.

Markets: Mood continues to improve

The mood on the markets is increasingly improving. A quick snapshot on the United States and Japan.

The US bond market continues to calm down

The risk premium of U.S. corporate bonds with good credit ratings to U.S. government securities has narrowed significantly again, indicating a calming in the U.S. bond market.

US housing market stabilizes

The NAHB housing market index in the U.S. reached its highest level since September 2022 in April and the price correction for houses accelerated on a monthly basis, indicating stabilization in the U.S. housing market.

Japan: Sentiment improves

The economy in Japan is performing robustly, driven by the service sector. In addition, new orders increased at the fastest rate since the survey began in 2007. The more positive trend in new orders from abroad and a lower rate of input cost inflation are contributing to improved sentiment.

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