Steel markets under pressure, stainless steel production at record highs
by David Fleschen
Steel prices remain at high levels. A tonne of hot-rolled and cold-rolled steel continues to cost EUR 1,435 and EUR 1,500 respectively. Both prices are thus still at record highs. On the LME, the price of rebar is not far from its all-time high at around USD 925 per tonne. The situation is similar for steel scrap at a good USD 640 per tonne. According to the research institute MEPS, which specialises in analysing the steel markets, the high steel prices are now weighing on steel demand. Accordingly, consumers and wholesalers are currently only ordering what they need, but not building up stocks. Since the car industry in Germany, for example, is cutting back its production again, it is likely to demand less steel for the time being, according to MEPS. According to the report, the reason for the drop in production is a shortage of cable harnesses and a tightening supply situation of metals such as aluminium and palladium. Chip shortages also persist. In the construction sector, many budgets of construction projects would be recalculated due to the high prices, resulting in some projects being postponed, according to MEPS. Construction companies are also finding it increasingly difficult to secure the steel they need. The more restrained demand actually speaks for a decline in steel prices. However, since the supply of many types of steel is currently scarce, we believe that a sustained price decline will be a long time coming.
As the International Stainless Steel Forum (ISSF) reported this month, global stainless steel production rose by 10.6% last year to a record high of 56.3 million tonnes. This more than made up for the Corona dip of the previous year. While hardly more stainless steel was produced in China than in the previous year, production was significantly expanded elsewhere (for example in Indonesia). This year, according to MEPS estimates, global stainless steel production will continue to rise to another record level of 58 million tonnes. In our opinion, this will lead to a correspondingly high demand for nickel.
Source: Commerzbank Research, Photo: Fotolia