BIR Convention predicts modest rally in stainless steel scrap prices

ABU DHABI (Scrap Monster): The delegates at the 2015 BIR Convention held in Dubai, UAE indicate that stainless steel scrap prices are unlikely to fall further. Moreover the current conditions suggest a modest rally in prices. According to them, stainless steel scrap prices had remained under pressure due to Chinese stainless steel makers heavily depending upon nickel pig iron as raw material in place of stainless steel scrap.

According to Markus Moll of Austria-based Steel & Metals Market Research (SMR), stainless steel promises sustained growth prospects in longer term. The Chinese producers have increasingly used nickel pig iron in place of stainless steel scrap. The increased consumption of nickel pig iron by Chinese stainless steel mills has set a floor on stainless steel scrap prices. This floor is set to rise, said Moll. Incidentally, China accounts for nearly 50% of the global stainless steel production.

The rise in electricity costs are bound to inflate the cost to smelt nickel pig iron. Consequently, the floor on stainless steel scrap pricing is likely to witness slow improvement. The gain in strength in Chinese RMB will also support rise in scrap prices. As per sources, the 17% VAT imposed by Chinese authorities on stainless steel scrap imports will limit the shipments into the country. Many Chinese mills are likely to prefer spot buying of imported scrap.

The Chinese Tsingshan Holding Group was the world’s largest stainless steel producer during entire year 2014. The combined stainless steel output by its subsidiaries totaled 4.2 million metric tons of stainless steel during the year.

The stainless steel demand from petrochemical sector saw huge drop during the previous year, with capital investments dropping sharply by over 30% year-on-year. The declining demand from petrochemical sector is unlikely to affect global stainless steel demand, as oil industry accounts for less than 4% of the global demand.