The monthly stainless steel index (MMI) fell 4.68% from February to March. At the same time, nickel prices also fell sharply.
The number of import licenses for cold rolled stainless steel in the US continues to fall. In fact, many importers seem concerned that importing materials remains too risky due to recession fears. At the same time, the US cold rolled market is in need of some imports as US flat steel production is not enough to meet demand. Without imported filling, some products such as thin gauges or ferritic stainless steels may be in short supply.
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Since 2007, South Africa has been forced to resort to a practice known as “load shedding”. This refers to the deliberate shutdown of electricity supply in certain areas. The duration of outages varies greatly, but is generally due to insufficient generating capacity. The reason for load shedding boils down to:
In addition, load shedding has increased significantly since 2022. Therefore, in China, it is basically “normalized”. South Africa is the world’s largest producer of chromium and the second or largest producer of ferrochromium (depending on the source). In turn, ferrochrome is a key raw material for stainless steel. In short, the global supply of ferrochromium depends on reliable power generation in South Africa.
Ferrochromium from South Africa is sold to several countries, but the biggest importers are China, Japan and the US. At the same time, the levels of US imports have changed over the past few months, with some imports moving to Kazakhstan. In any case, further power outages (which also sparked civil unrest) are sure to put pressure on South African ferrochromium producers.
According to MetalMiner’s analysis, ferrochromium producers are not energy independent enough. However, some news reports say that companies have committees dedicated to finding alternative energy sources. At some point, the consequences of this turbulence may show up in the installation of a stainless steel surcharge with chrome elements.
While nickel prices rose in the winter of 2022, the price trend eased in the spring. Lower lows will confirm if nickel prices resume their downtrend. However, at this time, the price continues to trade in a range. After the peak in January 2023, the price should find bullish support and reverse to establish an uptrend. Until then, the direction of the nickel market remains unclear.
As the LME struggles with liquidity, a new competitor will soon enter the market. Global Commodities Holdings (GCH)’s new nickel trading platform will be open to nickel producers and consumers only. This should help stabilize and reduce nickel price volatility as neither traders nor funds are involved.
Explore MetalMiner’s stainless steel cost model by scheduling an Insights platform demo.
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Post time: Mar-21-2023