Stainless and specialty steel producers are struggling this year with sluggish economic conditions and concerns about the global market, as well as regulations at home.
While stainless producers worry about overcapacity issues and the impact of imports, specialty steel manufacturers are wrestling with meeting domestic regulations, such as the new conflict minerals rules scheduled to take effect at the start of 2014.
Stainless prices have dropped around 14 percent since January, some blaming overcapacity and imports.
After growing 5.2 percent to a record 35.4 million tonnes last year, global stainless steel production surged another 6 percent year on year to nearly 9.4 million tonnes in the first quarter of this year, according to International Stainless Steel Forum data. As in 2012, China accounted for the production increase, with other regions of the world showing declines primarily due to destocking. Stainless output in China grew 18.3 percent in the quarter to 4.4 million tonnes, while output in the Americas fell 1.1 percent to 601,000 tonnes.
Stainless import license applications totaled 85,150 tonnes in June, according to the latest data from the U.S. Commerce Departments Import Administration, 19.6 percent below Januarys final import tally of 105,872 tonnes--the highest level so far this year--but 1.4 percent higher than the March low of 84,015 tonnes, Commerce figures show. Stainless exports have held relatively steady, averaging around 52,600 tonnes per month through May.
The specialty steel portion of the metals industry is in limbo trying to determine how new conflict minerals legislation will be enforced next year, according to David Skip Hartquist, counsel to the Specialty Steel Industry of North America (SSINA). He said that while the U.S. Securities and Exchange Commission had been receptive to input from the metals industry in developing the rule, which forms part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, it has since been unresponsive to questions from the industry on how the rule will work.
Both SSINA and the Copper and Brass Fabricators Council have been advising their members on how to prepare for the incoming rule, Hartquist said, and the process has been going smoothly so far. Weve also given companies sample letters to send to their customers, because theyre coming up the food chain asking about whether their products contain conflict minerals. So theyre working up the line with suppliers and down the line with customers.