NEW YORK — Consumer buying prices for stainless scrap have fallen further this month on the back of lower raw materials prices and softening demand.
"We bought one-third less than last month," a purchaser for a stainless mill said.
"We’re in full summer mode and it’s only June," a broker added.
As a result, 304 clips and solids this month are being sold at $1,860 to $1,900 per gross ton, down an average of 6 percent from $1,975 to $2,025 per ton last month.
Prices for 316 clips and solids have also weakened, with material now changing hands at $2,650 to $2,700 per ton, down an average of 3.6 percent from last month.
Current-month stainless scrap consumer buying prices are based on the average nickel price for the previous month. The cash nickel contract on the London Metal Exchange averaged $7.72 per pound during official sessions in May, down 4.9 percent from April.
Participants in the domestic stainless market have reported softening demand since stainless surcharges started falling in April due to lower nickel prices.
Stainless buyers, especially service centers, traditionally hold off when prices fall, wary of accumulating inventory in a lower price environment.
"It’s been a slowdown since after the second week of April," one dealer said.
But sources were not confident that nickel tags would see a resurgence in June despite a bounce over the past few days. The cash contract closed the LME’s official session at $7.75 per pound Wednesday, unchanged from the previous day but 1.6 percent higher than on Monday.
"I can see it going back down to seven bucks (per pound) just as quickly," a second broker said.
In addition to nickel, the major cost component of stainless scrap—prices for other raw materials such as ferrochrome, used in the production of stainless steel—have softened recently.
Prices for 400-series stainless scrap, which contains mainly ferrochrome and iron but no nickel, have also been pushed down as a result. Currently, 430 bundles and solids are between $590 and $620 per ton, down from $600 to $630 per ton a month ago; and 409 bundles and solids are between $525 and $545 per ton, down from $530 to $550 last month.