NEW YORK Stainless scrap processor buying prices have tumbled due to declining London Metal Exchange nickel prices and continuing soft demand, according to market sources.
Processors are buying 304 solids at $1,650 to $1,700 per gross ton, down from $1,700 to $1,790 previously. Transactions for 316 solids are in a range of $2,275 to $2,350 per ton, down from $2,350 to $2,420 previously.
Prices for 430 bundles and solids tightened to a range of $465 to $500 per ton from $465 to $520 previously, while 409 bundles and solids dropped to $375 to $405 from $380 to $430 per ton.
The London Metal Exchanges cash nickel price ended the official session at $17,200 per tonne ($7.80 per pound) Feb. 20, down 5.9 percent from $18,285 per tonne ($8.29 per pound) Feb. 12.
Markets sources told AMM that the fall in nickel prices, combined with an ongoing weakness in demand, has engendered the drop in free-market stainless scrap pricing.
"The market has taken a turn for the worse. The prices have dropped dramatically: one, because nickel has dropped, and two, because the order books at the mills just arent very good," one processor said.
"Consumers have material and theyre not too aggressive. Plus the export market is pretty dead," one dealer said. "Business is quiet. The only reason prices have been staying up where they are is because of the lack of material."
Some sources described the drop as an inevitable correction, given that demand has been below expectations since the start of this year.
"Weve been warning people about this for a while, saying that the stainless prices are overblown," a second processor said.
"I think the market got ahead of itself a little bit and that always has to be corrected. The market has to go down or the demand has to come up to meet it," a third processor said. "I dont think theres been any change in demand, its still medium (to) OK. But it has been that way for six months."