Stainless steel prices continue to decline as we approach the last quarter of the year. Meanwhile, nickel prices are hovering just above the 2021 average, having stabilized at $21,300/t in August. Both indexes seem to indicate an overcautious market where buyers and sellers seem to be waiting to see what others will do.
Such a "commodity" confrontation is far from ideal. Analysts advise buyers of stainless flats to expect lower transaction prices as autumn approaches. After all, the margins on alloys are low, and the competition between service centers is higher. In fact, many sheet steel mills in the US do not have customers in distribution due to imports affecting the overall supply.
However, the battle between supply and demand is never-ending. And in a tight market full of people looking to maximize their income, anything can happen.
What happens if the stainless steel market suddenly loses millions of tons of production? We won't have to wait long to find out the answer, because it's already happening. By the end of August, there were more and more reports that European stainless steel makers were having to scale back or shut down production entirely.
Without a doubt, Europe is facing a catastrophic energy crisis this winter, and possibly already this autumn. While many economists remain focused on the coming winter, cuts in gas supplies from Russia have already taken a toll. At the moment, about three million tons of European stainless steel production capacity is in danger of being shut down. With energy prices skyrocketing, many factories simply cannot afford to “keep the lights on,” so to speak.
Earlier in August, the Belgian plant Aperam closed its plant in Genk. Shortly thereafter, they cut production at their Chatelet factory. More recently, the Spanish company Acrinox announced a reduction in production and the transfer of about 85% of its employees to a reduced working day. Clearly, all eyes are now on other major European manufacturers, many of whom have just as much incentive to cut costs.
