Stainless steel pipe, fittings & flanges report: August 2018
The PVF industry continues to seek smooth travel amidst the ever-present turbulence created by the political, economic and environmental influences affecting stainless steel and its base materials. Uncertainty continues to loom as a global tariff, counter tariff chess match shifts the pendulum of short- and long-term expectations. All facets of stainless steel production are affected from stockpiles of ore to the supply finished goods as they await their final valuation ultimately determined by international trade negotiations. End-user confidence and speculation varies depending on “gut feeling” as individuals attempt to predict whether today’s pricing is inflated or the new bottom as prices continue to trend upward.
Environmental threats on supply
Political instability aside, nickel continues to feel increasing pressure from the global community as its impact on the environment remains a focal point. President Rodrigo Duterte of the Philippines discussed the possibility of ceasing mining operations due to concerns over the potential irreversible environmental impact. A temporary ease of concerns to supply-chain disruption followed a recent announcement that 23 of the 27 Philippian mines passed an environmental inspection. Nickel ore has also felt the pressure of environmental review as the Indonesian government temporarily revoked annual permits for four companies. Supply-chain disruption lingers as Indonesia continues to become stricter in demanding progress in smelter development. The Chinese government is not ignoring the environmental impact mining and manufacturing has on the environment as demonstrated with a recent crackdown on pollution effectively reducing the usage of nickel pig iron.
Supply & demand
About 2.2 million tons of nickel was sold in 2017. Nearly 2/3 of all nickel produced is absorbed for use by the stainless steel industry. The global production increase of 9.5% is not the only strain on current supplies. The worldwide initiative to reduce our carbon footprint has increased demand for nickel-based batteries used in electric vehicles. As technology improves and public demand for electric vehicles increases, the drain on nickel stockpiles will stress the available supply. LME warehouses have realized a stockpile depletion by about 30% in available tonnage year over year. If demand continues at the rate of the current 7-month average, all LME warehouses would exhaust stockpiles by December 2019.
Pricing trends & expectations
June marked the beginning of a pricing stall for nickel. As the annual summer slowdown seemed to impact demand, nickel prices began a backward slide through July. While pricing dipped nearly 7% over the course of the summer, core base metals noticed similar results during the same period. Despite the recent slide in nickel pricing, the long-term performance has continued to trend upward. The month average continues to hover around $6.13/lb. and the 3-month average stands at $5.83/lb. When compared to the annual averages dating back to 2015, you can see the reason speculators continue to remain bullish on long-term expectations. Nickel pricing averaged $4.73/lb. in 2017, $4.36 in 2016 and $5.37 in 2015. The decline of recent nickel performance has yet to impact stainless steel pricing as surcharges have continued to inch higher, supporting a strong upward trend. Analysts suggest buyers should take advantage of the pricing dips while expecting long-term increases in an overall bullish market.
The American Supply Association (ASA) and its Industrial Piping Division (IPD) is the national organization serving wholesaler-distributors and their suppliers in the industrial and mechanical pipe-valve-fitting industry. As a powerful alliance of channel partners, we provide a forum for your upstream trading partners to exchange critical information and address key issues.
In particular, ASA’s IPD members constantly check the pulse of the materials and commodities they proudly supply to you. ASA’s IPD members are knowledgeable industry leaders, and those who volunteer their service on the IPD Executive Council compile and prepare the IPD Commodity Reports. The Reports contain some of the most current and qualified market data and information available from the industry’s leading manufacturers and distributors about emerging trends and other price-influencing actions and events.
This information is an example of how ASA’s IPD manufacturer and distributor members are constantly looking ahead to ensure you have information and resources you need to be successful. Learn more at www.AdvanceYourAbility.com.