'Cautious Optimism' for Stainless Steel Sector Supports Global Recovery

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Demand for stainless steel and its raw material feed, nickel, is a bellwether indicator of the direction in which industrial economies are moving. The prevailing sentiment throughout the stainless steel supply chain is one of "cautious optimism" that 2014 will be a little better than 2013, both in terms of business volume and profitability, reports MEPS (International) Limited (Sheffield, England).

Stainless steel suppliers so far have reported no sign of a significant upturn in order tonnages, but the belief persists that there will be a moderate increase in activity in the coming months, and that 2014 could be the industry's best year in some time. Market players have said that activity and prices have been bumping along a prolonged bottom in the business cycle, and that the situation is close to its end.

Nickel prices are expected to rise in the early part of this year, despite a sustained global surplus. The medium-term effects of Indonesia's coming ban on mineral ore exports remain uncertain. Further hikes in ferrochrome prices are forecast during the first half of 2014.

A number of major western industrial nations have begun to record encouraging economic indicators, such as positive GDP growth, increasing manufacturing output and falling unemployment. Japan's economic stimulus measures, known as "Abenomics," have, at least in the short term, boosted industrial activity in a market that has been in the doldrums for two decades.

Growing output in all the traditional stainless steel-making countries and regions is forecast by MEPS, which covers the EU, U.S., Japan, South Korea and Taiwan. This production growth would be the first in the sector since 2010.

Stainless steelmaking capacity continues to grow in developing markets despite existing oversupply. Output in China and other emerging countries is forecast to increase slightly faster than in the West.

For related information, see March 8, 2013, article - Asia Leads as Global Stainless Steel Stats Consolidate and Move Forward.

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