US stainless steel market participants expect low demand to persist during the first quarter of 2023 as processors carry excess scrap inventory and consumer order books continue to indicate low demand.
Demand at most specialty stainless steel producers appears weak for the first quarter — and potentially into the second quarter — amid plentiful finished inventory readily available in the US.
Imports of finished stainless steel flat-roll products have undercut most North America stainless steel producers. Flat-roll products imported year to date through October increased by 59pc to 503,371t, up from 316,116t in the same period last year, according to US Commerce Department data.
Finished inventory is expected to normalize during the second quarter, which could spur customers back to the market. End-user demand is off, but that could be attributed to customers buying more than normal earlier in the cycle because of supply chain constraints — leading to higher inventories of goods.
So far, US stainless mills have not reduced prices to entice new business. In fact, most specialty stainless steel producers raised base prices several times this year to keep up with inflation — such as Universal Stainless & Alloy Products and Carpenter Technology increasing prices by 7pc to 12pc in November.
Early 2023 melting schedules will likely be atypical since order books are low because of excess inventory, especially for flat-roll products. But market fundamentals in North America appear to be solid from major end-markets like transportation, especially aerospace.
Stainless steel scrap prices are typically dependent on the nickel market, which represents about 70pc of the value of 304 stainless steel, but nickel has been particularly volatile this year — leading to even more uncertainly about prices.
Scrap prices for 304 stainless, which contains 8pc nickel and 18pc chrome, fell by nearly 40pc in 2022, from 98-99¢/lb in January to 60-61¢/lb as of mid-December. Over that same time LME nickel prices are up by 34pc. A 250pc spike in one 24-hour period in March that led the LME to suspend trading has further undermined trader confidence in the benchmark.
