Stainless-Steel Pipe, Fittings and Flanges report: October 2016
In 2016, the lack of U.S. industrial construction activity contributed to the further erosion in demand for stainless-steel products.
Reduced product demand has resulted in an overabundance of inventory throughout the supply chain, forcing nickel to a 10-year low in February. Since realizing rock bottom in February, nickel pricing has responded with gradual increases throughout 2016. The slight gains serve as a positive indicator that nickel prices will continue to creep closer to typical performance expectations over the next few years.
Over the past few months, the supply chain has continued to pass along 20% worth of price increases. These increases are still 50% lower than the high recorded in May 2014. Worth noting, Goldman Sachs supports price increase expectations as evidenced by releasing a statement projecting 2017 as “a banner year for nickel.”
Lower pricing for stainless steel has resulted in increased demand from markets unrelated to industrial construction. The benefit of stainless steel at lower cost has enabled manufacturers of industrial machinery, metal goods, household appliances and electronics to produce consumer goods at attractive prices. Increased demand for nickel as a component in lithium-ion batteries is expected to continue as electric car manufacturers predict 140 million of these vehicles will be on the road by 2035. External influences coupled with reduced on-hand inventory and optimistic industrial construction forecasts for 2017 should result in gradual, yet consistent inflation.