Mills, buyers disagree on future of stainless steel prices

By Tom Stundza -- Purchasing, 4/2/2008 10:00:00 AM

There is considerable debate about the future direction of stainless steel flat-rolled in the U.S. market. AK Steel this week says it plans to increase transaction prices for stainless steel sheet, strip and continuous mill plate products by adjusting the functional discount rate, which will equate to an increase in base prices of approximately 4% to 6%, depending on the grade. The AK Steel pricing action affects the 200, 300 and 400 series, as well as duplex grades, of sheet and plate shipped after this Sunday, April 6.

The Ohio-based steelmaker says the price increases are in response to stronger demand for stainless steel, as well as the need to recover increased costs of steel production. Key alloys in making stainless steel—nickel, molybdenum and chrome—have all risen in price lately because of reduced supply in the face of solid offshore demand.

But, OEM buyers have reduced purchasing considerably and say they have no plans to increase buys anytime soon.

With early 2008 consumption off by almost 11% from the fourth quarter tonnage of sheet and plate, stainless steel leadtimes still are less than two months for supplier deliveries, according to Purchasingdata.com; in fact, some mills are shipping cold-rolled sheet in coil (CRC) in four weeks. The latest report to clients from MEPS (International) Ltd. says that “while demand for stainless steel flat-rolled sheet and plate products from the capital goods sector is very strong, other (end-use) segments are weakening.

Purchasingdata.com reports that stainless steel cold-rolled sheet, grade 304, cost an average $4211/ton in March, which is forecast to slide to $4109 by June. Another market survey, by MEPS (International) Ltd., reports a March average of $3969, noting that “customers are only ordering what they need for immediate consumption and service centers are reluctant to restock.”