European domestic prices for flat-rolled stainless steel have
hit a trough, with steel mills preferring capacity cuts over
further price declines, market sources told Metal Bulletin on
Friday May 25.
"Steel mills in Europe are finding it very difficult at the
moment. They cannot lower prices any further but they are still
dealing with overcapacity," an analyst said.
Base prices for grade-304 cold rolled stainless sheet in 2mm
gauge held steady at €1,130-1,150 ($1,420-1,445) per tonne
delivered, unchanged from last week.
The June alloy surcharge surprised market participants by
rising to €1,414-1,423 from €1,381-1,402, as a rise
in chromium prices balanced out nickel prices.
"Nickel is trading around $17,000 per tonne, which is
traditionally a trough," a trader based in northern Europe
Developments in the eurozone debt crisis continue to cause
uncertainty in the markets, while market participants are
keeping a close watch on the weakening of the euro against the
"The euro-dollar exchange rate is $1.25 at the moment. If it
falls further to $1.20, this would stabilise things, but still
would not create a big opportunity for Europeans to make
money," the analyst added.
Friday's euro-dollar exchange rate was $1.2568, down by more
than 5% compared with $1.3250 on April 28.
As local demand continues to be weak and the Europeans cannot
compete with the export markets, stainless steel producers are
anticipating production cuts.
"The euro-dollar exchange rate has an effect but, in terms of
exports, European mills cannot compete with Asian prices," the
northern European trader noted.
"Most Europeans cannot make money and are reducing capacity -
not necessarily through closing plants, but by running fewer
shifts per plant," the analyst said.
Stainless sheet has fallen below €1,000 in Europe,
according to a second trader, though Metal Bulletin was unable
to confirm this with other market sources.
Domestic grade-304 stainless steel bright bar prices held
stable at €1,050-1,000 per tonne delivered.
"After a lot of movement, bright bar prices are now very
stable," one trader said. "It appears we have hit the trough
and I expect steel mills to respond by closing plants, to run
at lower capacity to keep their heads above water."
The June alloy surcharge surprised market participants, by
rising to €1,999-2,411 from a previous €1,880-2,079.