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SUBSTITUTION IN STAINLESS SECTOR ADVERSELY AFFECTING NICKEL DEMAND
02 March 2005 - MEPS (International)
| The high and volatile prices of the alloy metals that go into stainless
steel are causing massive problems for both producers and consumers. Nickel
of course is the chief culprit; its price during last year ranged from a
peak of almost $US18,000 per tonne to a low of around $US10,500 per tonne. |
The high cost of nickel-bearing stainless is prompting users to consider
alternatives and, in some cases, to switch to other - cheaper - materials.
Anecdotal evidence of a significant change in stainless consumption patterns
has now been confirmed by statistics from the Japan Stainless Steel
Association. Japanese domestic demand for stainless flat products in 2004 rose by 5.8
percent to 1.28million tonnes. Add in export sales, and the mills' total
order intake reached 1.72million tonnes - the highest for a decade. However,
the JSSA figures show that orders for nickel-bearing 300 series products
decreased by 4.4 percent, while those for nickel-free 400 series jumped by
almost 21 percent year-on-year. China has also been using much larger volumes of low-nickel 200 series
products to substitute more expensive 300 grades; although there now has
been some retracing of steps. European stainless mills have also reported
end-users switching to lower-cost nickel-free or low-nickel specifications.
Some customers may have quit stainless entirely. The reduction in Japanese sales of 300 series stainless last year represents
a loss of about 3,900 tonnes of nickel consumption. Japan accounts for
roughly 10 percent of total stainless demand. If this pattern were repeated
worldwide, then global nickel consumption would be quite significantly
reduced. Recently, the LME price of nickel exceeded $US16,000 per tonne for the first
time in five months. Many industry analysts expect demand to exceed
availability this year. However, if nickel-free stainless continues to take
market share away from 300 series, things may change. On the supply side new
projects, such as Voisey's Bay in Canada, and Goro and Koniambo in New
Caledonia, are now limbering up. Stainless producers say they think a 'reasonable' level for nickel would be
$US10,000/11,000 per tonne in the medium term. Under the impact of
increasing substitution and growing supply, this may become a reality sooner
than many had expected. Source: MEPS - Stainless Steel Review
http://www.meps.co.uk
About: MEPS (International)
MEPS (International) LTD is a leading consultancy company operating in the steel sector worldwide. The organisation was formed in 1979. Over the years we have undertaken a wide range of studies covering all aspects of the global steel scene. Our independence is the cornerstone of the business.The steel industry is the nucleus of our business. From the core activity we provide a range of services and advice to clients through our multi-disciplinary team of consultants. The areas in which our organisation has built up considerable expertise are highlighted below: Steel Market Prices
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