The MEPS world average stainless steel price is expected to extend its slow recovery due to rising raw material costs and local supply tightness in several regions. The world average price for 304 cold rolled coil increased, marginally, this month, to a figure just 3.6 per cent below the number recorded one year ago.

Raw material costs are expected to grow, moderately, from their current levels. The LME average nickel price is forecast to be around 15 per cent higher in the coming year than in the previous twelve month period.

Transaction values in Asia are expected to be quite stable, in the next two quarters, before rising gently, boosted by inventory building, to a peak in mid-2017. Selling figures are likely to soften, in the summer months.

In Europe, increases in basis prices are likely to be restricted, over the next twelve months, by surplus production capacity and competition from imports. Predicted increases in mill input expenditure should lead to rising transaction values, in early 2017. A seasonal, downward price trend is anticipated as the summer holiday period approaches.

In North America, US government tariffs on Asian imports will continue to tighten supply of cold rolled coil and put upward pressure on basis figures. Anticipated rises in raw material costs should result in further increases in transaction values, during the first half of next year. The effective price for type 304 cold rolled coil is forecast to be 6 per cent higher, in August 2017, than this month’s figure.

Source: MEPS – Stainless Steel Review – August Issue


According to MEPS, the sustainability of the recent global steel price recovery is likely to depend on supply-side considerations. The success of trade actions, amid a steady demand outlook will be important.

From MEPS research, in August, a number of US steel buyers remarked that the American market is becoming increasingly ‘protectionist’. The introduction of trade barriers on a number of flat products supported domestic producers, by restricting imports. This helped propel steel prices to financially viable levels for most US steel mills.

Many market participants and even end-users conceded that local values needed to rise from their historically low levels, with the assistance of trade petitions, to safeguard the long-term interests of the US steel industry. However, protection comes at a cost – the restriction of consumer choice. Exporters could also be threatened by reciprocal action by the named countries.

This month, the US Department of Commerce set final antidumping duties on hot rolled flat steel from Australia, Brazil, Japan, South Korea, the Netherlands, Turkey, and the UK, for five years.

The current differential between US domestic steel prices and international selling figures is likely to encourage more steel shipments, from countries not covered by the trade petitions, in the second half of the year. With other trade cases pending, US imports are at relatively low levels, but they have risen in recent months.

From MEPS research, in August, it was noted that value-added imports from Vietnam have become more readily available during the past four weeks. Other countries are likely to follow their lead.

One steel buyer labelled the US as the “go-to market” and said that a rise in imports will put negative pressure on domestic prices, which are already down from June highs. With this likelihood, new trade actions could be lodged by US producers. However, such measures will only provide a short-term solution. Until the issue of global overcapacity is addressed, it is likely that world steel prices will continue to be under negative pressure.

With the support of trade cases, global steel prices steadily rose, during the first half of the year. MEPS has long predicted that until crude steel production capacity is removed from the world scene, prices will continue on a downward trend into the future.

We do not expect global prices to fall to late 2015/early 2016 levels. Steelmakers are likely to retain a proportion of the increases that they successfully secured in the first six months of the year.

Source: MEPS International Steel Review – August 2016 Issue


The last twelve months was a turbulent period for steel purchasing in the European Union. The MEPS – EU average flat products composite steel selling price declined by €83 per tonne (17.5 percent), in the second half of last year.

By December 2015, domestic transaction figures had fallen to a twelve-year low. Substantial import pressure, both in terms of value and volume, forced domestic mills continually to reduce their price offers. The negative situation was compounded by falling raw material costs, nervous buyers anticipating further price reductions and a seasonal slowdown in demand. This created a perfect storm for the price collapse.

Activity in the European steel market remained muted at the beginning of 2016, with little prospect of a significant recovery in selling figures. A dramatic “volte-face” in pricing strategy by Chinese steelmakers brought a halt to the race to the bottom in global steel prices and transformed the outlook across the whole international steel scene.

Production cuts earlier in the year, low inventories throughout the supply chain and a seasonal pickup in demand provided the backdrop to a rapid rise in domestic Chinese steel prices. The government’s policy of large-scale monetary easing boosted construction activity. It also had the effect of driving up the futures market and increasing trader speculation. This scenario encouraged Chinese producers to hike their export offer prices.

The substantial losses previously made by the majority of the Chinese mills could not be tolerated for a significantly longer period of time. Furthermore, with the volume of China’s exports rising rapidly, at prices often below domestic values, the profitability of the policy was deteriorating over time.

Moreover, charges of dumping were bringing to the forefront claims of unfair trading from steel suppliers in a wide range of countries. These were undermining China’s attempts to show that it was operating a market economy within the regulations of the World Trade Organisation.

As Chinese export prices surged, many other major exporters, including those in the CIS, South Korea and Brazil, followed China’s lead and hiked their prices. Faced with unattractive import quotations, many buyers in Europe returned to domestic sources for their purchasing requirements. Consequently, European steelmakers captured a greater share of the local market and regained a degree of pricing power.

The mills took the opportunity to boost their profitability, after margins fell to an unsustainably low level at the beginning of the year. The MEPS – EU average flat products composite steel price jumped by €124 per tonne (31 percent), in the second quarter of this year. Selling figures then softened by €15 per tonne ahead of the summer holidays, in July.

The negative price sentiment, witnessed immediately before the long vacation period, has turned more positive. We have reports that strip mill product manufacturers are planning to raise their offer prices for September negotiations. Steelmakers hope to capitalise on tight availability within Europe and the recent uptick in the Chinese domestic steel market.

MEPS predicts that the short-term price trend will be stable, with increases difficult to achieve. We forecast that selling figures will decline in the final quarter of this year. Supply is expected to improve, in what is traditionally a slack season for demand. Furthermore, competitively-priced offers from overseas suppliers and low steelmaking raw material costs are forecast to exert negative pressure on local transaction values.

Despite the anticipated price reductions, MEPS believes that steel selling figures will remain above the low levels recorded in late 2015 / early 2016.

Source: MEPS – European Steel Review – August 2016 Issue


According to MEPS, purchasing activity for hot rolled stainless steel slowed, in Germany, as the summer holiday period approached. Sellers predict that, if nickel prices remain strong, customers will start to buy more substantial tonnages, in mid-August. European mills are divided over whether to seek basis price increases for September deliveries. Demand is reasonable, in Italy, but imports from Asia have swelled the volume of cheap material in service centres’ inventories

The plate market is subdued, in the United Kingdom. This has been amplified by the onset of the summer holidays. Enquires are plentiful but these are slow to turn into orders. Basis prices edged upward, largely due to the weakening of the pound sterling against the euro.

Alloy surcharges are on an upward trend, in Europe. Local mills are trying to lift cold rolled basis figures in small steps, each month. No such advance was agreed in Germany, for July. European mills’ order books are filling, slowly. Stockists in France are currently relying on service centres for most of their purchases, due to the local producers’ annual closures. Italian distributors are eager to lift basis prices but they face competition from the mills’ own service centres. Imports from the Far East are available for around €100 per tonne less than locally produced material.

Signs of an increase in commercial activity are detected, in the United Kingdom, after a very quiet period. Uncertainty persists, though, following the Brexit vote. Cold rolled basis values increased a little, in July – at least enough to offset the weakening of the pound sterling against the euro. In Spain, end-user purchases are at a slightly lower level than in June but, still, satisfactory.

Stainless bar prices are stable, in France, but advances are forecast, for September deliveries. Demand from some sectors has improved, in the United Kingdom. EU producers are looking to lift basis prices, in the coming months. Delivery lead times are extended but the mills are not yet operating at full capacity. End-users require immediate deliveries, so they rely on stockists. In Spain, effective prices for grade 304 bars are stable but will be pushed up by higher raw material costs in the near future.

Source: MEPS – Stainless Steel Review – July Issue