Quarterly Report – May 2021

This phase of complete euphoria seems to have no end. The second quarter of 2021 has been characterized by a continuous rise in almost all raw materials. As far as our sector is concerned, nickel is proving to be the most reluctant to record a strong increase, unlike copper and iron.

Chromium went against the trend. In fact, there was a price discrepancy in the first quarter between the Asian world and the one that has the European chrome benchmark as its reference point: the former suffered a sudden decline in the previous quarter while the latter recorded a very strong increase.

Demand for stainless steel scrap has not declined and sales prices are constantly growing, although not exponentially. In fact, there is great resistance on the part of stainless steel mills to raise their purchasing prices for scrap despite the large increases recorded in coil prices. Following the major competitive advantage resulting from the introduction of import duties, they found themselves able to maximize their profits through the differential between the price of scrap and that of coils. This can be seen in the fact that, on the sales side, they have created a situation of need among customers through a slowdown in deliveries, which in some cases has led to production stoppages for some end users.

On the procurement side, meanwhile, they are trying to reduce the cost of scrap by setting all operators in the sector in competition with each other, trying to give preference in terms of quantities purchased to those willing to lower the selling price. Two other measures being implemented in an attempt to reduce scrap prices are: greater use of ferro-alloys, which currently have good availability and at good discounts; and the importation of slabs.

Tension on the scrap market remains high owing to a demand that seems destined not to stop and to the strong speculative attitude on the part of some operators. It is also driven by the enormous differential between the selling price of sheets, with the gap currently at around Euro 1800 per tonne.

Ruggero Ricco - Ruggero Ricco (Italy)

Ruggero Ricco

Nichel Leghe Spa (ITA)

Quarterly Report – May 2021