BIR World Recycling Convention: ‘Soft patch’ for stainless steel

Joost van Kleef of Netherlands-based Oryx Stainless and chairman of the Bureau of International Recycling (BIR) Stainless Steel & Special Alloys Committee said recent weeks have brought the “confusing” reality of substantially higher nickel prices but a fall in stainless steel values. He asked, “How is that possible?” at the committee’s meeting during the BIR World Recycling Convention Round-Table Sessions in Budapest, Hungary, Oct. 14-15.

Two guest speakers at the meeting looked to provide some answers to the question.

Natalie Scott-Gray, senior metals demand analyst at New York-based INTL FCStone, said the September nickel prices were triggered by supply concerns following Indonesia’s decision to bring forward its complete ban on nickel exports to January 2020. The announcement has come at a time of “robust” stainless steel production, booming electric vehicle battery demand and falling LME nickel stocks.

Stainless steel production is forecast to climb two percent in 2019, a lower growth rate than in recent years, but “not bad” given the more depressed economic climate, Scott-Gray added. Furthermore, stainless steel demand is projected to jump 16 percent over the next five years.

Scott-Gray also highlighted forecasts of an 11 percent upswing this year in the average nickel price to $14,556 per metric ton followed by a 17 percent hike in 2020 to $17,100. A more limited growth is expected for 2021 and 2022.

Developments in the nickel market will depend on key factors, including the outcome of trade talks between the United States and China and the lawsuit between the European Union and the World Trade Organization over the Indonesian nickel ban causing supply shortages, Scott-Gray said.

Guest speaker Olivier Masson, senior analyst at London-based Roskill, also acknowledged the recent jump in nickel values, but insisted “the price is not historically high.” Having declared that the stainless steel market “is going through a relatively soft patch,” he outlined some significant changes in stainless trading patterns, including a drop in U.S. cold-rolled steel imports since the imposition of Section 232 tariffs and the negative impact on China’s exports of hot-rolled material as Indonesia searches for markets for its stainless output.

Looking to the coming decade, Masson suggested the greater adoption of electric vehicles will drive increased requirements for nickel, entailing more use of nickel and nickel sulphate for batteries.

“To supply this material, more refineries are going to be needed, but a diversion of Class I material from the stainless industry towards the battery industry would also help,” he said. “Lowering Class I use would require greater Class II use and greater scrap use by stainless mills.”

While China and Indonesia are heavily geared towards the use of nickel pig iron in stainless steel production, the U.S., Europe and India “are more reliant on scrap and I expect that trend to continue,” Masson said.