Stainless steel output may fall 10%, say recyclers Scrap finds no acceleration in orders for the second quarter

Print this page Posted on : 03-26-2009 by recycleinme.com

It will be the third consecutive year that stainless steel makers reduce production and a decline of 10 per cent would be the steepest cut since at least 2001.

Bloomberg

March 25

Stainless steel producers will probably cut output by at least 10 per cent this year because there are few signs that demand will strengthen any time soon, the Brussels-based Bureau of International Recycling said.

No order acceleration

Recyclers supplying stainless steel scrap, accounting for about 40 per cent of the raw materials used by mills, have seen no acceleration in orders for the second quarter, said Mr Michael Wright, President of the BIRs Stainless and Alloy Board.

Production will fall by a minimum of 10 per cent, but it could be considerably more, Mr Wright said by phone.

It will be the third consecutive year that stainless steel makers reduce production and a decline of 10 per cent would be the steepest cut since at least 2001. Production peaked at 28.4 million tonnes in 2006, falling to 25.9 mt last year, according to the Brussels-based International Stainless Steel Forum.

Stainless steel scrap is valued by its component parts, including nickel, chrome and iron.

Value of scrap

Pricing is set as a discount to the cost of nickel traded on the London Metal Exchange. Stainless accounts for about two-thirds of global nickel demand.

In a normal market, the discount is around 3 to 10 per cent, but it did actually drop as far as 20 per cent when we really hit the credit squeeze and the mills weren't buying, Mr Wright said.

The discount is now at 8-12 per cent, he said.

Stainless steel producers are also seeking to reduce the nickel content of their products, a process that was accelerated when nickel reached a record $51,800 a tonne in 2007.

Nickel content

Austenitic grades of stainless, with a higher nickel content, accounted for about 58 per cent of all production last year, compared with 60 per cent in 2007, Mr Wright estimated.

The BIRs members include 715 companies and 41 national associations, spread across 54 countries.

Source : Business Line