US stainless scrap dealers and processors are increasingly concerned an oversupplied scrap market may weigh on first-quarter prices.
Low domestic stainless mill demand and steady scrap flows into dealers and processors created persistent oversupply during the fourth quarter and led to overbuilt inventories at some scrap buyers.
Oversupply and declining nickel prices caused stainless processors to drop 304 solids prices for single truckloads on 17 December to 48-50¢/lb, the lowest level since early November 2022.
US stainless mills seasonally slow their scrap buying in the back half of the fourth quarter, but lower finished stainless demand caused that trend to begin earlier this year, during the end of the third quarter.
Global stainless steel producer Outokumpu expected company-wide fourth quarter shipments to fall by 5-15pc from the third quarter, according to its third quarter earnings call in October, which would be a 4,400-11,200 metric tonne (t) decline from the fourth quarter of 2024. The company noted it has not seen an increase in industrial activity or stainless steel demand, and that apparent third quarter consumption for cold-rolled flat stainless products declined by 4pc from a year earlier.
Spanish-based competitor Acerinox, which runs the Kentucky-based North American Stainless mill, said in November that economic uncertainty in the US delayed contract negotiations, which usually conclude by October and were expected to wrap up in November and December. Fourth-quarter stainless demand and sales are expected to fall because of seasonal end-of-year factors.
US stainless mills produced 538,000t of finished steel in the third quarter of 2025, the lowest level of the year and down by 21,000t sequentially, according to data from Worldsteel. Still, lower mill production does not appear to be the main culprit of weaker scrap markets. Third-quarter production was still 56,000t higher than the same period of 2024, and US output for the year through September was up 9.3pc to 1.65mn t from a year earlier, according to WorldSteel.
Stainless mills typically buy larger volumes of scrap in the first quarter to produce more finished stainless, which in turn feeds increased service center demand as they restock inventories depleted during the fourth quarter.
US stainless scrap dealers and processors are increasingly doubtful that stainless mill demand will be as strong in the first quarter, with processors facing the prospect of having to compete harder with each other on price as mills potentially force scrap prices to remain depressed.
Weaker mill demand has been further exacerbated by raw material softness, especially in nickel.
Global nickel oversupply has contributed heavily in recent months to weaker London Metal Exchange (LME) cash prices. LME prices hit a recent low on $6.40/lb on 16 December before surging almost 12pc since then after Indonesian officials announced plans to change their nickel ore price formula and potentially reduce supply. Nickel, which often accounts for more than half the value in commodity grade stainless scrap costs, was down by $2,385/t ($1.08/lb) as of mid-December since hitting a yearly peak of $16,710/t ($7.58/lb) on 12 March. Oversupply was estimated to reach over 200,000t in 2026, according to Russian multi-metals producer Norilsk Nickel, but those estimates could shift following the latest developments out of Indonesia.
Norilsk had pinned the blame for growing nickel supply squarely on rising Indonesian production.
Indonesian nickel pig iron (NPI) production rose by 27pc to 1.37mn t over the first nine months of 2025 from the same period of 2024, according to the China Nonferrous Metals Industry Association at the 2025 Nickel and Cobalt Industry Conference in November. Producers added 12 new NPI production lines in the first three quarters of 2025, moderating from 32 in 2024. NPI is a primary feedstock in the production of stainless steels, particularly in China.
Although its unclear whether the latest changes to Indonesian ore production will force different plans, producers in the country had targeted increased growth in output of mixed hydroxide precipitate (MHP) — a precursor for nickel sulphate and then battery production. Output of MHP from Indonesia climbed by 64pc to 360,000t in the first nine months of 2025 from a year earlier.
US stainless markets have also had to cope with a 2025 surge in scrap imports and drop in exports. Year-to-date September — the latest month that data is available after the US government shutdown — the higher imports and drop in exports have potentially added or kept within the US an extra 117,700t of stainless scrap, according to estimates from customs data.
