Quarterly Report – May 2021

As the developing world takes advantage of COVID inoculation programmes, Asia - and Taiwan in particular - is still waiting for mRNA vaccines. The AstraZeneca vaccine is available but the uptake rate is low.

The past quarter showed how volatile nickel can be, and that risk and reward should be monitored at all times. The metal’s price during the quarter had been at around US$ 20,000 per tonne before dropping sharply to US$ 16,000 on the announcement by Indonesia’s nickel pig iron (NPI) producers that they would produce 100,000 tonnes of nickel equivalent in the form of nickel matt using NPI as a raw material. After a flat month, nickel started to follow big brother copper’s bull run, steadying at around US$ 17,300 per tonne.

The stainless steel market in Asia is a tale of two worlds. In the first quarter of 2021, Taiwanese mills’ stainless steel scrap demand was weak compared to the international market. And pricing remains under pressure as Indonesian nickel units in the form of NPI and hot coils are continuing to arrive in Taiwan. According to Taiwan’s customs statistics, imports of Indonesian stainless hot coils and flat products have again inched higher, with approximately 80,000 tonnes of stainless plates and hot coils entering Taiwan every month of this year up to April and accounting for some 60% of Taiwanese stainless demand. In May, there has been some spot demand from the mills as their order books have slightly improved.

After a good start to the year in terms of melt production in South Korea, maintenance throughout the second quarter resulted in a significant drop in demand for stainless scrap. There are reports that demand will return in quarter three after a slightly slow second quarter.

In China, stainless scrap demand has been steady. Local market pricing of 304 stainless scrap remains below the international level, meaning that NPI is still the preferred raw material option.

Japanese stainless scrap demand was still low in this year’s first quarter when compared to previous years because construction for the Olympic Games has now finished and, as a result of mergers, the country is home to only two stainless mills such that overall production capacity is capped at approximately 2.5 million tonnes per year.

April was a good month in India and demand for stainless steel was strong amid relatively low numbers of COVID infections. Demand appeared to be improving month on month for scrap, ferro-nickel and NPI as plants had strong order books. In May, however, India has suffered a further, very severe COVID wave which has taken the country by surprise; on a daily basis, thousands of lives are being lost and many hundreds of thousands of new infections are emerging. India’s medical infrastructure is not able to cope with this sudden spike in cases, with medicines, hospital beds, oxygen and vaccinations all in short supply. There are lockdowns and curfews in most cities, and the majority of citizens are stuck at home owing to movement restrictions.

On the commercial side, most companies are closed and semis factories also shut. Steel plants have been told not to consume oxygen owing to the acute shortages for medical purposes, thus prompting several to close their doors. The banks and financial institutions are only attending to very urgent matters. It will take time for the COVID situation to be brought under control and for conditions to normalize.

Vegas Yang - Vegas Yang (Asia)

Vegas Yang

HSKU Raw Material Ltd, Taiwan (CHN) & Mahiar R. Patel, Cronimet (SGP)

Quarterly Report – May 2021