The domestic stainless steel
market might not see much growth in 2013, and market conditions
could bear more than a passing resemblance to last year.
My forecast for the total
market (in 2012) is that itll be down slightly and
well be flat (in 2013), Ed Blot, owner of Ed Blot
& Associates Inc., told participants at AMMs
26th annual Stainless and Its Alloys Conference in Chicago.
Markus Moll, managing director and senior
analyst at Austrian firm Steel & Metals Market Research
GmbH, agreed that a flat year is the best the domestic market
can hope for, but he also left open the possibility of a
decline if economic issues, such as the debt ceiling, are not
The main end markets for
stainless are tied strongly to gross domestic product growth,
which has been hampered due to fiscal and political issues.
Were not looking for
a lot of growth. Automotive is likely (reaching a plateau) at
the 15-million-unit level. The consumer is still strained
financially, and general industrial demand at this point looks
pretty tepid, one industry analyst said.
Not all sources shared the tepid
Distributors liquidated a
lot of inventory (in 2012) as nickel prices fell. Even if we
assumed no restocking (in 2013), there would be the absence of
inventory liquidation. I would be very disappointed if the U.S.
market didnt strengthen by at least 5 percent, said
John Tumazos of Holmdel, N.J.-based Very Independent Research
Much like in 2012, demand is
expected to start the year strong, buoyed by price increases on
commodity flat-rolled stainless and restocking at the
distributor and consumer levels, then taper off toward the end
of the year, most sources agreed.
The first quarter will
start off with a bang, kind of like (2012), and after that
its going to be pretty mediocre, said one nickel
supplier to the stainless industry.
While there was some
disagreement on demand levels, all sources agreed that base
prices are likely to remain under pressure due to overcapacity,
both domestically and abroad.
Pricing will be poor and
import competition will continue, Tumazos said, adding
that 2013 likely will bring a good volume, poor
looking at another year of pretty weak base pricing unless you
see a nickel catalyst, which we dont see right now,
the industry analyst said, adding that the United States likely
will remain a highly competitive marketplace.
Domestically, the start-up of
the melt shop at ThyssenKrupp Stainless USA LLCs facility
in Calvert, Ala., likely will have an effect on base prices as
the mill looks to establish itself in the marketplace.
You can point to a couple
of issues on the supply side. The obvious one is Thyssen,
the analyst said.
However, the merger between
parent Inoxum Group, a division of Germanys ThyssenKrupp
AG, and Finlands Outokumpu Oyj puts the plant under new
ownership, and some analysts have suggested that the Finnish
stainless producer might consider a different ramp-up
(Outokumpu) may say,
Wait a minute, maybe thats not the right thing to
do, growing all this market share. At the same time,
theyre going to have to do something with the melt
shop, Blot said.
overcapacity, especially in Asia, and subsequently high levels
of imports also will continue to affect the domestic
Import penetration by all
stainless products rose nearly 16 percent in the first nine
months of 2012, according to the latest figures from the
Specialty Steel Industry of North America, and the industry
body has expressed concern specifically about the sharp rise in
imports of stainless plate, which jumped more than 34 percent
in the nine-month period.
Imports are at pretty high
levels, while the demand environment at this point is sort of
stable, the industry analyst said.
No outlook on stainless would be
complete without a look at nickel prices, the main determinant
of stainless surcharges that now make up more than half the
sales prices for stainless.
If prices increase for the metal
and, subsequently, surcharges, distributors and consumers are
less likely to run down their inventories or delay projects in
anticipation of lower prices.
However, nickel tags are not
expected to rise substantially as tepid global demand and
growing supplyÑfrom the Ambatovy nickel mine in
Madagascar, for exampleÑlikely will keep the market in a
surplus, most analysts agree (see nickel outlook, page
38). Also, nickel pig iron will again be a significant
supply factor in China, with its low-cost production keeping
nickel prices range-bound.
The outlook for nickel
rising is poor, said Tumazos, who also cited high stocks
in London Metal Exchange warehouses.
While the growth outlook for the
domestic market is less than bullish, global demand growth for
stainless is assured as China especially continues to urbanize
and per-capita stainless consumption keeps growing in
Research house Macquarie Capital
Ltd. expects global stainless production to total 38.1 million
tonnes in 2013, up 7.6 percent from 35.4 million tonnes in
2012, according to a recent research note.