NEW YORK Stainless steel
distributors have seen sluggish demand in the opening weeks of
the new year, but while volumes remain below traditional
levels, some market players say they are hopeful a pickup is in
"I would say its tepid,
but I do feel that were right around the corner from
improved demand. I just feel that were due for a cyclical
upturn," a source at one Midwest stainless distributor said,
citing continued strong automotive demand, a pickup in the
housing market and increased consumer spending. "The general
economic news is pointing upnot 90 degrees, but maybe
three degrees. That will eventually trickle down to our
Also lending the market some
possible near-term support is the fact that nickel prices have
been fairly stable on the London Metal Exchange, which means
Februarys surcharges likely will be close to this
months levels. The cash nickel contract on the LME
settled at $17,385 per tonne ($7.89 per pound) in official
trading Jan. 17, up just 0.6 percent from $17,285 per tonne
($7.84 per pound) the previous day.
That kind of pricing
stabilitylargely absent in a volatile 2012can
encourage consumers to come back into the market, sources
"What I like so far this year is
that at least the surcharge is steady. Its the most
stable its been in many months," an East Coast
distributor source said.
Meanwhile, price increases
implemented on commodity flat-rolled products by domestic mills
at the beginning of January are said to be holding.
"Certainly the mills are very
interested (in making them stick); they claim they need it.
Theyre concerned about any further deterioration," the
East Coast distributor source said.
But while some players say they
expect stronger demand ahead, sources said that so far demand
in January has been below expectations, particularly compared
with the strong start to 2012.
"Its better than December
but not quite great or active," the East Coast distributor
The sluggish activity so far in
January follows a year of contraction in stainless distributor
Shipments by U.S. stainless
steel distributors totaled 1.76 million tons last year, down
1.4 percent from 1.79 million tons in 2011, according to the
latest data from the Metals Service Center Institute
totaled 121,100 tons, down 1.7 percent from 123,100 tons a year
earlier, and inventory levels rose to 3.7 months supply
last month, the highest level recorded by MSCI in at least two