Asian Stainless Sheet Markets Show No Response to Rising Mat. Costs

According to informed sources, the stainless sheet export markets across the Asian region have seen no fluctuation in the product prices despite rising raw material costs such as nickel (Ni) and chromium (Cr). Rather, the prices remain weak, going slightly down.

The price of Ni, a raw material of Ni-base stainless sheets, was below $6.5 per pound in March, but now exceeds the mark, and LME's inventories have gone below the 0.30-mil-ton mark for the first time since June 2014. 

However, the markets show little response. In the Wuxi market in China, the price of Ni-base cold-rolled sheet is 15,350 CNY ($2,361 including tax), down by 100 CNY ($15) week-on-week. What is hindering the expected price rise is reportedly cheap hot-rolled steel coil (HRC) from Indonesia.

In the export market, the current price for CR is said to be at $2,050-2,100 CFR. Again, the product prices here do not reflect the rising Ni price. In the case of Japanese mills, most of their SUS304 are distributed on the 'tied sales' basis, and there are only a limited number of talks taking place in the spot market, for which their break-even price is $2,500. As such, the mills have been refraining from having negotiations, and in any case, their profits are undoubtedly suffering from the rising Ni price, which has pushed up the entire costs.

The price of Cr-base stainless sheets is also a let-down. The Cr price per pound for this quarter has increased by 24 cents quarter-on-quarter to 124 cents. This increase plus other expenses are said to require a price raise of at least $100 to break even. However, the price of CR in the export market is $1,450-1,500 CFR, showing no marked fluctuations.

What lay behind these unchanged prices of Cr-base stainless sheets are, according to the sources, the moves of POSCO. Since last year, the company has, out of concerns about the moves of PT Indonesia Tsingshan Stainless Steel and its potential entry into the market of Ni-base products, further shifted towards ferrite products. With this stance, the South Korean maker has gone into harsher competitions against Japanese mills in the area of SUS 430, especially over negotiations with Japanese companies operating in the region. POSCO is particularly aggressive on 430XL, a high-end product among 430. There is also a mounting concern within Japan over a possible increase in import quantities from South Korea.

It is expected that the EU makes a provisional decision on around 10 June regarding its safeguard investigation on steel products. To Europe in 2017, South Korea, Taiwan, and China (with the anti-dumping duties imposed) exported stainless sheets at 130,000 tons, 260,000 tons, and 17,000 tons, respectively. If these products were all squeezed out from the region, that would cause havoc on the market. The concern over this possibility is also one of the reasons behind the unchanged product prices.