It is reported that 2009 was a bad year for the stainless steel industry just like many others with prices collapsing, demand falling and producers making record losses. Throughout the world there where companies either closing down or making wholesale cut back, but now the boom is back.

On the back of improved demand and two year high for nickel prices have rallied but have they rallied too much, what is really driving the market. Over the last three months stainless steel prices have risen around 25% at the beginning of the year prices where around EUR 1950 for grade 304 stainless, April deliveries are now over EUR 2500 with higher prices forecast for May. Demand for the domestic markets in China has certainly increased and Chinese mills are aggressively increasing prices on the back of this demand. In Europe where monthly surcharges are announced linked mainly to the prices of Nickel, Chrome and Molybdenum it’s easy to see where prices are going the following month. Although domestic demand has risen some of the key drivers are from distributors keen to beat the increases, this isn’t real demand mainly re stocking and seeing the opportunity to make some money on surcharge rises.

In the longer term if you look at the fragile economies of Europe and the US with inflation very low how can consumers accept price increases of over 25%. In reality they can’t and won’t, yet in many domestic products stainless steel will make up over 80% of the costs. With a mini commodity boom on the LME traders are getting richer but once the mills increase production of stainless steel and more nickel is mined will prices remain so high? We will have to see is this a real boom or will the prices go bust again.

(Sourced from www.stainlesssteel.me)