Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

The stainless steel scrap market is recovering rapidly in 2021 on improving demand and higher prices, according to the Bureau of International Recycling (BIR).


However, increasing freight costs and continued unavailability of containers to ship are affecting the global trade of low-value stainless steel grades such as chrome steel and the 200 series stainless steel. 


US market improving

The US stainless steel scrap market improved significantly in December 2020 and January despite the significant impact of the COVID-19 pandemic. The outlook for 2021 remains positive though US scrap recyclers have started witnessing a slight slowdown in the market at present. Stainless steel producer Outokumpu, however, expects a 10-20pc increase in deliveries this quarter compared to the previous one. 


In December 2020, shipments from US steel mills increased by more than 4pc to 7mn mt compared to the previous month, which also continued in January. BIR cited consumer restocking, increased nickel prices, rising carbon steel prices by more than $100/gt in some US markets as some of the major factors for this rise. That said, BIR reported that more than three months of shutdowns in H1 2020 have resulted in pent-up demand and rising prices that are still affecting the stainless steel market in the country. 


Domestic demand up in Europe

The EU’s stainless steel industry is witnessing improving demand and higher price levels since the beginning of 2021. Attributing the increased demand for domestic scrap to higher freight rates and shipping constraints into the continent, BIR  noted that the rise and fall in ferrous prices over the past two months has market participants awaiting more clarity on the stainless steel market’s direction. 


Europe’s stainless steel production has risen over the past few months after the continent applied import duties on stainless steel. Output has risen particularly in Italy after the country’s stainless steel prices surged by 30pc in Q4 2020 because of tight supply and increased raw material prices. BIR expects Italy’s stainless steel prices next month to be in line with February before rising again in April due to increasing nickel and chrome prices.


Stability in Asia

In Asia, the market will remain stable in Q1 2021 following strong demand-driven cues last year, as the region awaits the impact of China’s new scrap regulation on the stainless steel industry. 


Demand for stainless steel is especially improving in Taiwan and South Korea since Q4 2020 after both nations began importing Indonesian NPI and hot coils. Taiwan’s stainless steel imports comprised 40pc of Indonesia’s hot coil and flat products in December last year. The rising stainless steel demand in China has also led to increasing raw material prices in the country. 


Japan’s stainless steel scrap demand also improved in the fourth quarter of 2020 but is still considered low compared to the same period in 2019 since the country only has two major stainless steel producers with a total production capacity capped at 2.5mn mt annually. 


Zero duty on stainless steel imports and reduced antidumping duty restrictions on stainless steel scrap imported into India are putting additional pressure on the country’s domestic mills, BIR reported. With nickel prices increasing globally, stainless steel production costs have also risen by 30pc for Indian manufacturers with financial institutions being of little help owing to the economic tightness in the country. 


Recovery in the Middle East

The Middle East’s economies are expected to improve as COVID-19 vaccines in the region are being rolled out rapidly. After a 7pc drop in Dubai’s GDP in 2020, the region projects a 3pc growth in GDP this year. Demand for stainless steel in the sector was impacted as the construction and hospitality industries were shut down due to the impact of COVID-19 in the region. Since last November though, the Middle East has seen a 4-5pc increase in stainless steel demand with prices for the 304 grade increasing by $100/mt. 

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