NEW YORK Flat-rolled
stainless steel distributors have seen demand fall following a
solid start to the year.
"Demand is very weak, very
disappointing. Its been down pretty much the past month,"
one mid-Atlantic stainless steel service center executive
"Its not completely in the
doldrums, but I wish we were busier," a service center
executive in the Midwest added.
The demand slowdown is borne out
by the latest figures from the Metals Service Center Institute
(MSCI), which show a 9-percent decline in stainless service
center shipments in March to 156,700 tons after a 5.9-percent
month-on-month gain in February.
Year-to-date stainless shipments
stood at 463,200 tons, down 2.6 percent from the same period a
year earlier, according to MSCI figures.
Markus Moll, managing director
and senior market analyst at Austrias Steel & Metals
Market Research GmbH (SMR), said in a recent presentation that
U.S. stainless market growth is set to slow this year after an
explosive rise in 2011 as the market has almost reached
pre-recession consumption levels (AMM, March 27).
Service center sources
couldnt point to a single factor, such as the recent drop
in nickel prices, to explain the falloff, citing instead a
concerning fall in real demand.
Stainless customers usually hold
off on buying when nickel prices decline as they try to time
the bottom of the market, but sources said thats not the
"Nickel dropping shouldnt
really impact the market at this point, as most people already
thought it had reached the bottom," a southern stainless
service center source said.
The cash nickel contract on the
London Metal Exchange has averaged $8.17 per pound in the
current surcharge calculation period, down 7.1 percent from
$8.79 per pound the month prior, prompting sources to expect
lower stainless surcharges for May.
"The drop should be a little shy
of 6 cents (per pound) on 304 and almost 8 (cents per pound) on
316," the southern purchasing manager said.
But even the anticipated lower
extrawhich makes up almost two-thirds of the sales price
on commodity 304 stainlessisnt enough to lure most
distributors into buying more material forward.
"Everybody is still cautious,
cautious, cautious," the purchasing manager said.
Stainless service center
inventories in March stood at 391,600 tons, about 2.5
months supply, down 11.9 percent from February and the
lowest level recorded in 15 months, according to MSCI data.
Even with end-user demand
seemingly slowing, most distributors said mills were still
holding the line on recent price increases, but some said that
discounts could be had for larger tonnages.
"Theres been nothing
official, but I hear that theres some dealing going on
for tonnage commitments. That gives me some ability to
negotiate against the increase," the purchasing manager
Lead times between producers
vary, sources said, with one foreign-owned mill booked out into
late June while other mills are still said to have May
production available, according to sources.
Imports remain competitive,
sources said, especially in light of the recent price
"Any time you have a base price
increase, it makes imports that much more attractive," the
southern service center source said.