TORONTO Profits in the
flat-rolled stainless steel industry will be "nonexistent for
the next three years," according to an executive at Global
Stainless Steel Inc.
The arrival of new production
capacity in the North American stainless
marketparticularly through the Calvert, Ala., mill of
Finlands Outokumpu Oyjis likely to "keep prices
depressed for the foreseeable future," Brad Beauchamp, vice
president of the Mississauga, Ontario-based company, said at
the International Nickel Conference in Toronto, hosted by
AMM sister publication Metal Bulletin.
"In our opinion, stainless
flat-rolled profits will be nonexistent for the next three
years," he said.
This could cause some players in
the stainless industry to look elsewhere, with AK Steel Corp.,
West Chester, Ohio, being one company that "might just stay in
the carbon business," Beauchamp said.
"Something has to give in North
America with stainless. Outokumpu is just going to get bigger
and stronger," he said. "Service centers that sell all
flat-rolled products, such as carbon, aluminum, stainless and
red metals, are finding the risk is not worth the reward in
An AK Steel spokesman told
AMM that the company isnt even contemplating a
withdrawal from the stainless market.
"In regard to stainless steel,
and as we reported during our first-quarter 2013 earnings
conference call, sales activity has remained steady, with a
slight uptick recently. We are focused on the
higher-value-added segments and, thus far in 2013, our
automotive exhaust grades have exhibited stronger demand. That
trend is expected to continue for the foreseeable future," the
Meanwhile, weakness in the
stainless sector has seen mill lead times come down to as low
as five to six weeks, while inventory levels have come down to
slightly more than two months supply from four
months supply, Beauchamp said.
However, lower prices will be
good for the North American manufacturing sector, he added,
with domestic stainless mills having the ability to look into
the export sector to compensate for flat local demand.
Beauchamp emphasized the need
for cooperation between the nickel and stainless markets,
particularly with stainless representing 73 percent of nickel
"Nickel mines, mills and
distribution must work together to help calm the waters, ensure
we all make money and better understand each others need
to do so," he said.