Bird Stainless comments on stainless steel prices.
The price of stainless steel is rarely out of the news, as it is affected by so many factors: supply and demand, the base price; the alloy surcharge; the money markets & currency fluctuations; the scrap metal price; speculation and lastly supply and demand in the world economy. And in the UK we can add to that the uncertainty and outcomes surrounding Brexit. But the one area that has dominated the news in recent weeks is the alloy surcharge which in September hit 5-year highs. We thought it would be useful to give an explanation as to why this is happening and to provide some reassurance on how Bird Stainless has been working to minimise the impact.
The alloy surcharges have been driven by a rise in the price of nickel, an important component in most stainless-steel grades, which aids versatility, specifically formability, weldability and ductility, also increasing corrosion resistance. Notably, over two thirds of global nickel production is used in the manufacture of stainless steel. The price rise has largely been driven by an announcement by the Indonesian Government of a nickel ore export ban from January 1st 2020 and significantly Indonesia was the world’s largest nickel mining producer last year and the second largest exporter of nickel ore and concentrate after the Philippines. This has been done by the Indonesian Government to build up their own domestic smelting industry, putting an estimated 10% of global nickel production at risk. This has naturally fuelled price speculation.
So how does this affect Bird Stainless prices?
Most of our steels have a relatively low nickel content, so our surcharges are not bouncing around quite so acutely. We are also exceptionally well stocked, so the surcharges won’t affect us too much in the short term. We have over 2,800 tonnes of specialist stainless grades in our on-site warehouses, as we have been steadily increasing our stocks by over 25% over the course of the last 18 months, in the light of Brexit uncertainty and anticipation of just such price increases. It remains to be seen what the final Brexit outcome will be and slower recent trading is preventing prices from rising too sharply, but one final new factor affecting the nickel price is the increase in demand coming from its use in battery packs for hybrid and electric vehicles, a market that is globally showing sustained and dramatic growth. There will always be another new factor such as this affecting the price of stainless steel, but rest assured we track movements daily and will continue to do our utmost to minimise the impact for our customers.