EU end users could opt for 400-series stainless on high nickel costs

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Nickel prices have seen strong increases recently, with the monthly average of the three-month daily official bid/offer spread on the London Metal Exchange coming in at $17,416 per tonne for April, compared with $14,138 for January.

The nickel prices increases have sent the alloy surcharge applied to 300-series products rocketing.

The European monthly alloy surcharge for June jumped by €174-305 ($237-415) per tonne for grade-304 and grade-316 sheet and bright bar.

A shift towards the 400-series, or ferritics, would come from the end-user side rather than from mills, Steel & Metals Market Research (SMR) md Markus Moll said on Wednesday May 28.

“End-users are the driving force for a switch. Years ago the mills came up with no-nickel substitutions, which are still available today, but they often only sell these directly to big end-users and don’t stock them,” Moll said.

“Stockists don’t like ferritics as there are smaller margins when selling them [compared with the 300-series],” he added.

Although an increase in demand for ferritics instead of austenitics would be a big change for producers, Moll told Steel First that a drastic swing would be unlikely.

“It would be more a case of going from 55% austenitic to 54%, over three years,” Moll said.

Distribution contacts in Europe have started discussions with end-users about a potential switch, however, Steel First was told.

“End-users could push more for ferritics if nickel continues to be strong,” one stockholder said.

“I’m also hearing people discuss ferritics. We have to start thinking about that,” a distributor added.

Yesterday, Taiwanese producer Yusco raised its 300-series prices, but left its 400-series prices flat for June.