TPT January 2020

G LOBA L MARKE T P L AC E

temporary respite when the EC Safeguarding quota tonnages for several stainless steel product forms are exhausted. This is forecast to happen before the end of the quota period. Rising nickel prices are significantly increasing input costs for most stainless steel producers, but, in many parts of the world, suppliers are unable to pass the increase on to their customers. Steelmakers are absorbing the rising price of raw materials with the result of cuts to, if not the complete annihilation of, their profits. In North America, however, recent increases in alloy have been fully applied, but this may become more difficult to sustain as surcharges continue to rise while end-user demand for stainless steel is subdued. Trade action by the USA has cut the volume of steel, and manufactured goods, from China and other Asian countries, but this, in turn, has negatively affected the ability of consumers from emerging economies to buy goods from developed countries. The MEPS Stainless Steel Review believes the price of nickel has been pushed up by predictions of a future shortage. The metal will face higher consumption from the increasing demand for batteries for electric vehicles, and an imminent ban on nickel ore exports from Indonesia will reduce supply until foreign investments in nickel refining facilities in that country begin commercial operations. A recent recovery for US flat steel product prices apparently ground to a halt. MEPS’ September report showed that US selling prices have levelled, with a threat of negative pressure through the fourth, and traditionally slowest, quarter of the year. US steel manufacturers are likely to find few market signals for optimism. A combination of weak demand and relatively high domestic production threatens the sustainability of current prices. A slowdown in major US end-user markets, such as automotive, construction and energy, is widely anticipated. Domestic capability utilisation remains around 80 per cent, with several US steelmakers making plans to reduce output and extend downtime for maintenance. Impact on the market is likely to be negligible, with domestic supply continuing to exceed demand. Despite the implementation of Section 232 measures, imported volumes continue to be an influence on the US steel market. The impact of current trade legislation has been reduced since exemptions were granted for Canada and Mexico, and agreements reached on steel import quotas from Argentina, Australia, Brazil and South Korea. The ongoing trade tensions between the USA and China are continuing to erode buyer confidence, but MEPS offers grounds for optimism. MEPS predicts that a recovery in scrap costs, and a seasonal upturn in steel purchasing, are likely to exert upward pressure on US sales figures in early 2020.

“Most importantly, this study reinforces the strength and resiliency of the scrap recycling industry,” said Mr Pickard. “Recycling has always been based on supply and demand. Yet, at no other time have there been such fluctuations in global market conditions and demand for high quality scrap. The fact that the industry is responding to these outside forces, and remaining an economic force, is a testament to its ability to adapt and [to] a strong workforce.” The $110bn economic impact puts the recycling industry on a par with radio and television broadcasting, building services, and warehousing and storage industries. It includes roughly $4.94bn in state and local tax revenues and $7.96bn in federal taxes. The manufactur ing c l imate European foundry sector looking gloomy The business climate in the European foundry industry dropped slightly in September. Once again, foundries were less satisfied with their ongoing business, and their expectations for the next six months are reserved. The European Foundry Industry Sentiment Indicator (FISI) is the earliest indicator to supply information on the performance of the European foundry industry. Published monthly by the European Foundry Association (CAEF) it is based on survey responses from CAEF members who offer an assessment of the current business situation in the foundry sector, and their expectations for the forthcoming six months. The findings are said to be typical for the current trend of European industry. The EU Commission’s Business Climate Indicator (BCI) concluded that the European manufacturing sector is under severe pressure. Several downgrades of forecasts – both for new registrations and the production of passenger cars, as well as for the sales of machines – are already a sign of lower investment activity, and of a further decline in the new year. Current demand development for cast components and production plans offer no improvement in the near future. Every month, the BCI evaluates development conditions in the European manufacturing sector using five criteria from an industry survey: production trends, order books, export order books, stocks and production expectations. Rising costs and capacity combine to harass stainless steel producers A review of the stainless steel sector in early October showed nothing is getting easier for the industry. Producers in traditional stainless steelmaking areas are competing with growing global excess capacity, and European mills struggle to compete with prices from Asia. There may be

60

www.read-tpt.com

JANUARY 2020