- US stainless-steel output likely increased by 50,000 tons to 2.85 million tons in 2018. MEPS expects output growth to trend moderately upward at 2% in 2019.
- Global consumption rates are expected to absorb this additional output, keeping prices stabilized in 2019 based on current global manufacturing and economic growth forecasts.
- Input prices into stainless PFF are mixed. LME nickel inventories hit 5-year lows in March at just below 193,000 tons (220,000 in the last update) and there has been little change since. Some key producer markets have altered the volume of export output they will allow. Spot nickel prices were trading in the $5.86/lb. range in mid-March ($5.60 in the last update). There was a small surge in early March above $6.00, but that soon retreated and there was a similar pattern in February. There is nothing suggesting a return to the 2018 peak of just over $7/lb. hit in June, but little to suggest another December trough of $4.81/lb.
Key factors that could affect supply or price:
- As mentioned last month, global demand has softened enough in Asian and European markets to keep prices softer, despite 5-year inventory lows. Manufacturing demand was expected to improve in the coming quarters, but there has been more skepticism regarding that growth as Europe and China face slowing economic growth. Negative sentiment concerning global manufacturing activity has prices lower.
- MEPS forecasts global stainless-steel output will rise 4.7% in 2019, weaker than the 2018 output estimate of an increase of 7.6% Y/Y at 51.75 million tons. Yet, if these estimates hold, it would still remain a record year for global output.
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