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Prices of stainless steel are generally set to reach highs for the year as 2020 comes to a close. For the most common nickel-containing grades of stainless steel, this upward trend is being driven above all by rising nickel prices, which themselves are hitting relatively high levels into the end of 2020.
The price increases since late November on grade 304 flat products amount to about $100 per tonne in most major markets of the world, which in turn represents a price increase of around 4-5%. This is impressive for a single month; indeed, prices have rallied by around 17% since their lows back in May (or in March for Asia).
Further increases are likely too as 2021 begins but, as we illustrate in our European analysis this month, these price increases appear rather unimpressive compared to those in most carbon steel markets. Steelmakers' margins, while improving in the stainless segment, also appear to be lagging behind their counterparts in the carbon steel industry.
Confluences of key supply and demand factors explain much of this, with supply of stainless steel rebounding quicker than that for carbon steel following the widespread shutdowns in business activity in Europe and the United States in particular back in April/May. Demand has rebounded by a smaller degree than that for carbon steel as well, a theme that we touch on in our discussion of Asian markets this month.
And while prices are likely to continue higher in the short term given our expectations for raw materials prices, steelmakers are likely to struggle to increase margins to any notable extent. The consumer-orientated major end users of stainless steel will remain under pressure next year, while supplies on a global scale remain plentiful.
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