BIR World Mirror on Stainless Steel & Special Alloys - Issue October 2015

Price levels are not sustainable

2015 remains one of the most challenging years to date for the stainless steel recycling industry.

Despite the fact that the EU imposed anti-dumping duties on imports of certain stainless steel products from China and Taiwan, its crude stainless steel production fell more than 5% year on year to July. The main reason for this is the still-high level of finished goods as well as an increased number of imports from countries like South Korea and South Africa. Furthermore, final demand was slightly lower than expected and weak raw material prices failed to stimulate the purchasing behaviour of traders and stockists.

This trend continued in the third quarter and is expected to persist in the final quarter, with the probability of an even steeper decline towards the end of the year.

The stainless steel scrap market has been influenced by this dynamic, but suffered even more as a result of the continuous falls in raw material pricing. All alloying elements - Cr, Ni, Mo and, last but not least, Fe - have sustained significant price declines during 2015, and as the price volatility of nickel as a commodity can be controlled through efficient risk management, price erosion affecting Mo and particularly Fe had - and is still having - a direct impact on overall profitability.

These price levels are not sustainable and the availability of stainless scrap will be duly influenced. At current price levels, all raw material producers - primary as well as secondary - will not be able to supply sufficient amounts of product at profitable levels. Price levels of underlying alloying elements must increase in order to secure a continuous flow of raw materials.

Joost  van Kleef (KMR Stainless B.V.),
Chairman of the BIR Stainless Steel & Special Alloys Committee

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