The COVID-19 pandemic has resulted in stainless-steel demand declining by around 10-15pc globally. So far this year, stainless-steel demand in the North American market has fallen by 20-25pc, declined by 15-20pc in Europe, and has decreased by 5-10pc in China compared to the previous year.
According to Edward J. Blot, founder and president of Ed Blot and Associates, the COVID-19 related lockdowns from earlier this year, will continue to impact the stainless-steel market.
Blot, whose firm specializes in market research, product development, and strategic business planning for stainless-steel and nickel alloys producers, distributors, and consumers told Davis Index that the impact has been especially felt by the US stainless-steel mills. “US produces close to 85pc of stainless steel across North America and the pandemic has decreased the country’s stainless-steel output by at least 20-25pc from last year,” he said.
However, he added that the supply chain has remained unaffected mostly due to mills destocking existing goods and refraining from producing new material given the overall drop in demand in the market.
Emphasizing on the complementary relation between nickel and stainless steel, Blot said that with 70pc of stainless-steel production dependent on nickel demand and vice-versa, the fall in stainless demand has also resulted in a significant decline in nickel costs. These, in turn, have resulted in falling stainless-steel prices, he told Davis Index.
“Although electric vehicle battery production consumes a lot of nickel, it can still not offset the decrease in overall consumption of stainless steel globally,” said Blot, who foresees new opportunities for the sector despite the current adversities.
He listed the market for medical equipment as one such emerging opportunity stating that this industry is wide open to divert the metal towards it. “This field was not considered a part of the core market initially, but the growing demand for stainless-steel in medical tools, is considered a great prospect,” he said, “Although I feel this spike in demand for stainless steel for medical equipment is short-term and may level off within a year or two as the world gets back to normalcy.”
Speaking of normalization, Blot said that both demand and consumption of stainless steel could pick up in Q4 2020 and strengthen further moving into 2021 if there are no more COVID-19 related shutdowns owing to a potential second round of infections. If the markets do sustain through the next few months and the beginning of 2021, he forecasts stainless-steel demand and prices returning to pre-pandemic levels by next year.