Latest Stainless Steel News 16/06/2010

Wed 16 Jun 2010

Stainless steel market to hold steady

In the last two weeks, stainless steel market was heavily affected by the plummeting nickel price, even the sellers of finished stainless steel product had to cut the price to win the orders.

Yesterday, nickel price in LME returned to over US$20,000/ton again, which reduces market panic to some extent.

Market participants noted before the Chinese and European markets return back to a more stable situation, the stainless steel market will probably remain quiet.

Output cuts to help stablising stainless price

Market participants in Asia's stainless steel market are relying on production cuts and nickel prices holding steady in the July-September period to halt the current slide in stainless prices.

Chinese mills are expected to cut production in the third quarter, so hopefully that will help to support stainless prices. As the market is in oversupply, output cuts in the third quarter will help the market and prices return to some form of balance. Some stainless mills in China and Taiwan are expected to cut output and some to carry out maintenance starting June.

Other than output cuts, industry observers are also hoping that the recent rebound in nickel prices will be sustained. Nickel prices on the London Metal Exchange are holding at above $19,000/t after rebounding from $18,000/t last week. But it is still hard to say if the rebound can be sustained or just a temporary technical adjustment.

For the stainless mills and traders, the need of factors will support stainless prices is even more crucial as demand is expected to slow next quarter. July-September is the usual off-peak season for consumption in China and business activities slow down in Europe due to summer holidays.

Stainless slowdown in Q3 could pressure nickel lower

Output cuts to stainless production in China and slower demand from Europe due to summer holidays could pressure nickel prices lower in Q3. Stainless mills in China are expected to cut production in July-September, with some medium- and small-sized producers in the country already halting production this month to conduct maintenance. With overall demand likely to slow in Europe and the US too due to summer holidays, nickel prices could dip even lower in the coming quarter.

However some industry observers say predicting further nickel price direction is hard as the recent decline in commodity prices is largely due to negative sentiments caused by the European debt crisis and fears that China's credit tightening measures may slow its economy rather than fundamentals.

Stainless steel producers and traders are hoping for prices to at least holding around the $18,000-20,000/t range so stainless prices are under less downward pressure.

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