Far from declining since Inco resumed production after a lengthy strike at its Sudbury operation in Canada, the price of nickel has gone from strength to strength. Whether it is driven by the activities of financial speculators, by a shortfall in physical supply or by some other factor, the price shows few signs of coming back down below USD 10,000 in the short term. It is a far cry from a year ago, when the price was around the USD 7000 mark. For stainless steel suppliers this has several consequences. Mills with an established alloy surcharge system in place are doing better than those who have to negotiate with their customers each time nickel surges to new heights. We believe some big producers in Asia, for example, are struggling to make a profit – even with the strength of stainless demand there – because of their rising raw material costs.
The explosion in nickel prices is beginning to take its toll on some areas of stainless steel consumption. There is considerable debate about the extent to which high prices could choke off growth in stainless demand over the medium term. Many end-users are accustomed to fluctuating prices but the strength of nickel is prompting them to look for alternatives, often low nickel or nickel-free grades, but the biggest threat could come from non-steel materials. In many cases type 430 will do the job of type 304. The 200 series is getting a fresh work-out, notably in Asia.
