NEW YORK Shipments by stainless steel distributors fell in April after three consecutive month-on-month increases, according to Metals Service Center Institute (MSCI) data.
Shipments of all stainless shapes totaled 144,200 tons last month, down 8 percent from 156,700 tons in March and marginally lower than 144,700 tons in April last year, putting the year-to-date total at 607,300 tons, 2.1 percent lower than 620,100 tons in the first four months of 2011.
"Demand sucks; there is none," one southern service center manager said, adding that a restocking drive by his customers that started earlier this year had ended recently.
A market source agreed. "They (customers) feel they have enough, and if they dont, they feel they can scramble and get it cheaper later" due to falling nickel prices, he said.
Last month, distributors lamented that demand was starting to drop (AMM, April 19).
Inventories held by stainless steel distributors totaled 388,400 tons (2.7 months supply at current shipping rates) at the end of April vs. 391,600 tons (2.5 months supply) a month earlier and 440,900 tons (3.0 months supply) in April last year.
Falling nickel prices on the London Metal Exchange, the largest component of stainless steel surcharges, are said to be part of the reason for the decline in demand as buyers wait for the bottom in pricing.
"The continuing decline of nickel has people skittish," the market source said.
The cash nickel contract on the LME has averaged $17,412 per tonne ($7.90 per pound) during the first 17 days of the surcharge period for June, down 3.2 percent from the previous surcharge period, making it likely that surcharges will fall for the third month in a row.
There are some bright spots in the market, however. A Midwest service center executive noted a significant uptick in sales to the automotive market so far this year. "Were seeing much better demand, mainly from existing customers," he said.
The market source echoed the sentiment. "The appliance sector is still weak due to low housing starts, while anything linked to automotive is doing well," he said.