UK based MEPS said that "The steady rise in austenitic stainless steel transaction prices in Europe over the past five months has been arrested, mainly due to a reduction in alloy surcharges in October. Basis values in most EU countries are unchanged this month. There were small increases in France and the UK, the latter significantly affected by a weakening of the pound against the euro. We have reports of lower selling figures in Italy, where imported coils from the Far East are said to be available at effective prices €300 per tonne below the prevailing local figures."
According to MEPS, the mills are trying to keep basis values at their present levels but they are being undermined by various parties selling ex-stock material cheaply in order to improve cash flow. Several major European producers are reported to have increased their output in an attempt to reduce delivery lead times and secure market share. Market participants in Scandinavia are a little more optimistic than those in mainland Europe and some sectors, including automotive, are now showing more positive signs, at present. However, there are few indications of an upturn in underlying demand and buyers are currently loathe to risk increasing their inventories.
It added that "Consumption is, similarly, weak in the US. Basis prices are constrained by competition between sellers for any large purchase. Despite this gloomy picture, transaction prices increased due to significantly higher alloy surcharges this month. Stockists are operating on a hand to mouth basis as they can secure their needs from the inflated inventories at the mill depots and master distributors. Buying activity has been particularly slow in the second half of October as customers look forward to lower surcharges next month."
The major producers in Japan continue to increase their list prices but the market is slow to respond as overall levels of consumption remain weak. Transaction values fell slightly in South Korea and Taiwan this month, as a result of lower nickel costs and subdued demand. Effective selling numbers in China fell during late September and early October before rising slightly in response to movements in the LME nickel figure. The oversupply situation is serious. The Chinese mills have produced at close to capacity in 2009 and many customers have bought material in anticipation of a pick-up in the market. Now, end-users are consuming their swollen inventories rather than making new purchases. Producers will therefore, be forced to reduce output or prices or both.