Market activity in the stainless steel market in Europe has improved month on month, but so far remains below the level recorded in January 2022. Buyer confidence is weak amid continued geopolitical and economic uncertainty, as well as volatility in the prices of raw materials for steelmaking.
Stainless steel inventories in Europe remain relatively high. However, most buyers expect they will need to place at least some factory restocking orders in February and March to be ready for April/June deliveries.
Expected to be the rate of destocking will accelerate during the first quarter, supported by lower import inflows. The remaining quotas remain available for stainless steel cold rolled sheets and strips from all countries except Turkey. As of January 30, just under half of Taiwan's quota and more than seventy-five percent of "other countries" quota are available.
This is despite import bids remaining below domestic prices. Purchasing managers report that most of the Asian prices they receive for type 304 cold rolled coil are below €3,000 per ton, including shipping and any applicable duties or tariffs.
However, as buyers are concerned about the future direction of demand and prices, more expensive but faster delivery from local suppliers is currently more profitable. This is in contrast to the stainless steel bar market, where imports of Indian origin remain high due to a significant price advantage of over 1,000 euros per ton.
European mills continue to publish their monthly alloy mark-ups, although the pricing mechanism "base plus alloy" is now rarely used in transactions between manufacturers and their main buyers.
However, several buyers noted that the current fixed price offerings would result in extremely low or in some cases negative base prices when this month's alloy surcharge values are subtracted.
A further increase in surcharges for February alloys was announced. It is unlikely that European stainless steel producers will be able to raise their fixed selling prices by the same amount, especially for grade 316.
However, buying activity is expected to improve next month as more service centers and sellers will start thinking about how to cover their material needs for the second quarter.
