Stainless steel producers throughout the world are succeeding in securing higher prices, although there appears to be no increase in underlying demand in most markets, according to an industry consultancy report.
The steady climb in the London Metal Exchange (LME) nickel figures has enabled suppliers to lift transaction values by applying their local mechanisms for accounting for variations in alloy expenditure, according to MEPS (International) Ltd on July 1.
MEPS said in Taiwan, India and China, government stimulus measures have brought about what could be considered real increases in demand and many of the producers in these countries have been operating at close to full capacity in recent weeks.
It added that Outokumpu, in Finland has also decided to lift output from the low levels in the first half of this year.
"Market fundamentals would suggest an orderly growth in price and consumption of stainless steel. Real demand is still weak in most countries. The nickel price is arguably inflated - given the high level of stocks in the LME warehouses. However, past experience shows that market fundamentals do not always apply in this sector," it said.
MEPS said rising stainless steel prices over the next few months may prompt buyers to rethink their current conservative approach to purchasing.
It said these buyers could decide to increase their order volumes on the mills in an effort to beat the potential price revival, particularly, as April is widely recognised as the bottom point of this steel cycle.
The combined effect of increased mill activity in Asia and the EU in the coming months and the prospect of further rises in customers' requirements would result in shortages and additional alloy costs.
It said the merry-go-round of boom and bust in stainless prices could start once more but not with the same intensity as in 2006/2007.
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