The Monthly Stainless Metals Index (MMI) rose 4.5% as basic flat-rolled steel prices continued to rise due to extended lead times and limited domestic capacity (following a similar trend with steel prices).
Stainless steel producers raise prices
Stainless steel producers North American Stainless Steel (NAS) and Outokumpu announced effective price increases for February deliveries.
The two producers announced a reduction of two discount points for standard chemistry 304, 304L and 316L. For 304, the base price increase is approximately $0.0350/lb.
Outokumpu diverged from NAS, as it increased all other 300-series, 200-series and 400-series alloys by reducing the functional discount by three points. Additionally, Outokumpu will also implement a $0.05/lb surcharge for 21 gauge and lighter.
As the only 72″ wide producer in North America, Outokumpu has upped their 72″ wide adder to $0.18/lb.
Along with higher base prices, alloy surcharges are rising for the third month in a row. February alloy surcharges for 304 will be $0.8592/lb, an increase of $0.0784/lb from January.
NAS and Outokumpu are also revising their equalized freight rates, which will come into effect in March.
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The price of nickel continues to rise
Over the past two months, most base metals appeared to lose momentum after a bullish price rally in the second half of 2020. However, nickel prices on the LME and SHFE managed to maintain the bullish trend until 2021.
LME nickel closed the week of February 5 at $17,995/mt. Meanwhile, SHFE nickel prices closed at CNY133,650/mt (or $20,663/mt).
The price increase could be due to a bull market as well as market fears of material shortages. Expectations of increased demand for nickel batteries remain strong.
US secures nickel supply
In an effort to secure nickel supplies for the domestic market, the US government is negotiating with Canada Nickel Co Ltd., a junior Canadian mining company, Reuters reported. The United States is seeking to ensure that the nickel produced under the Crawford Nickel-Cobalt Sulphide project fuels future American production of electric car batteries. Additionally, it would supply the growing stainless steel market.
Establishing this kind of strategic supply chain with Canada could prevent nickel prices – and therefore stainless steel prices – from rising due to fears of material shortages.
Currently, China exports large quantities of nickel to produce nickel pig iron and stainless steel. Therefore, China has interests in most of the global nickel supply chain.
Chinese dominance in the nickel market can be seen in the chart below. Nickel prices in China and the LME follow the same trend. The China price, however, consistently trades higher than its LME counterpart.
Real metal prices and trends
Allegheny Ludlum 316 stainless steel surcharge rose 10.4% month-over-month to $1.17/pound. Surcharge 304 increased by 8.6% to $0.88/lb.
LME three-month primary nickel rose 6.9% to $17,761/mt.
Chinese 316 cold rolled coil rose to $3,512.27/mt. Similarly, Chinese 304 cold rolled coils fetched $2,540.95/mt.
Chinese primary nickel rose 3.8% to $20,778.32/mt. Indian primary nickel rose 2.4% to $17.77/kilogram.
FeCr chunks rose 3.3% to $1,662.89/mt.
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