World stainless steel prices slip

According to MEPS, the stainless steel market appears to be at a crossroads, with raw material costs, end-user demand and the aims of the producers all having their separate influences. In the West the post-recession pick-up in demand is eagerly awaited. In Europe, the peak in the LME nickel values during late December and January has led to a significant hike in alloy surcharges for February. Furthermore, anticipated increases in the cost of other raw materials, such as iron ore and ferrochrome, should continue to push alloy surcharges higher. Some of the major European producers attempted to roll over or even raise basis figures in January but this met with limited success. With escalating surcharges in prospect, buyers are unlikely to accept yet more increments to transaction values. The restraining factor is end-user demand. The situation in the US is similar. Surcharges have risen for February and are likely to do so again for March. Meanwhile, the basis price advances announced by the producers, to be applied in January, have not met with universal acceptance. Large projects are on hold, awaiting government funding or private investment, while consumer spending and confidence continue to exhibit recessionary features. The economies of the Far East show different characteristics from those in the West. Observers in Japan are seeing signs of improvement after a long, difficult, time. There are reports of increased demand from automotive and domestic appliance manufacturers, though not from construction. These positive signals have not yet given rise to any increase in market stainless steel prices. Demand in Korea, Taiwan and China has been much less influenced by the recession in the West. Stainless steel production has continued at levels much closer to full capacity than has been the case in Europe or North America.
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