North American processors and exporters are finding it hard to forecast the stainless-steel demand through the last quarter of 2020. They shared some trends with Davis Index that could affect the stainless steel market in the short term.
Traditionally, stainless-steel demand towards the end of the year has always been slow. This year, however, the uncertainty around the US elections and the fear of a potential second wave of COVID-19 infections hitting the economy has kept market participants on the edge, a Houston-based processor told Davis Index.
Moreover, the automotive, aerospace, and construction industries—all key consumers of stainless-steel—are still struggling to bring back their outputs to pre-pandemic levels. For example, Boeing’s deliveries in August declined significantly to 87 units from 276 units in the same month last year while Nissan’s sales in July declined by 13.8pc from July last year.
Another Ontario based processor mentioned that stainless-steel demand in the restaurant industry has also been affected. The pandemic has prompted more restaurants to lean towards takeout and home delivery and new restaurants are opting for smaller places with just take outs as an option. This has significantly reduced the demand for stainless steel cutlery used in dine-in restaurants.
The uncertainty has also affected the stainless-steel export market, which has been soft lately with countries focusing on curtailing the spread of the virus, an exporter based out of Georgia said. He added that China’s scrap import restrictions have put additional pressure on the global ferrous and non-ferrous markets.
That said, stainless-steel demand is steady at present, after a strict lockdown period that continued throughout the summer months. Markets have started opening, prices are rising, and excess inventory sitting in the warehouses has depleted, sending optimistic signals to suppliers. Now, companies are trying their best to return to pre-pandemic volumes and are pushing hard to achieve the best financial year-end results.
However, the increasing demand has resulted in a shortage of material as many machine shops have shut down or are out of business because of the prolonged lockdown period due to COVID-19. This trend has led to tight supply putting upward pressure on prices and many processors struggling to maintain good margins while selling to the mills.
This see-saw of stainless-steel demand-supply has made the overall stainless-steel market volatile making it difficult to predict an outlook for the rest of the year.