Germany SSHRC Prices Expected to Stabilize Despite Nickel Fluctuations and Economic Pressures

The German Stainless Steel HR Coil (SSHRC) market is experiencing a volatility under the influence of feedstock, reflecting broader European and global trends in the steel industry. Recent developments suggest a period of cautious stability for SSHRC prices, with potential for narrow fluctuations in the coming weeks.

European steel giant Outokumpu's second-quarter performance offers insights into the SSHRC market dynamics. While the company reported satisfactory results and improved profitability compared to the first quarter, concerns linger about the European business area. This situation underscores the challenges facing SSHRC producers in Germany and across Europe.

To maintain profitability in this challenging environment, manufacturers are focusing on enhancing cost competitiveness, particularly in commodity stainless steel production. Outokumpu's strategy of leveraging Nordic clean energy and competitive energy prices for its Finnish operations could influence the broader market, potentially affecting German producers' competitive position.

The expected price trend for SSHRC in Germany dropped by around 2% in August according to ChemAnalyst. The imminent publication of EU mills' stainless steel alloy surcharges for September 2024 is drawing attention, despite growing scepticism about the relevance of this pricing model. With Electric Arc Furnaces (EAF) in EU mills now using over 90% stainless steel scrap, the traditional alloy surcharge system seems increasingly outdated for the SSHRC sector.

Global nickel price trends are exerting influence on the German SSHRC market. Early August saw a significant surge in ferronickel prices in China, despite a stronger US Dollar Index. This was followed by an increase in the London Metal Exchange (LME) nickel spot price by mid-August.

The SSHRC market is also contending with broader economic headwinds. Manufacturing in Germany has seen continued decline, with new orders experiencing their largest reduction since last year. This downturn is reflected in reduced workforce numbers and decreased purchasing of inputs, factors that directly impact SSHRC demand and production.

Despite these challenges, there are some positive indicators for the SSHRC sector. Suppliers' delivery times have shortened for the seventh consecutive month, potentially easing supply chain pressures for producers. However, manufacturing cost inflation remains high, with output prices increasing, adding complexity to SSHRC pricing strategies.

As per ChemAnalyst, the upcoming months points to a cautiously optimistic outlook for the German SSHRC market. While demand may remain subdued due to ongoing economic challenges, the potential for stabilization in raw material costs and improvements in production efficiency could provide some support to SSHRC prices. Market participants will be closely watching for signs of recovery in key end-use sectors, which could drive the demand. However, the persistence of inflationary pressures and global market uncertainties means that the SSHRC sector in Germany will likely continue to navigate a challenging landscape in the near term.