Steel and Stainless Steel Scrap are the key to Green Steel

After reaching a new high of USD 15,810.00/mt on the London Metal Exchange (LME) on the 3rd September 2020 nickel took a well deserved rest. Prices are said to be consolidating, as the rise happened very quickly and almost linear, which brought rates into what is known as an overbought region. Looking at it from a technical analysis point of view this cries out for a correction. First of all some air has to be carefully released so no artificial bubble is formed which could then burst. But it should not be forgotten that whilst prices were rising, the external value of the US Dollar decreased not insignificantly in the same time frame. This meant that nickel, expressed in other currencies, did not seem as strong. At the moment, however, the good global demand for stainless steel scrap does show that the rise
in nickel was not just of speculative nature.

Basically it is always understandable that stainless steel producers wish to push for price reductions in raw materials, but the fact that supply and demand determines the price should also be understood, and not just to an economics professor. And why, when demand is rising and supply is not increasing at quite the same pace, should prices fall, as this defies all the usual economic market logic. Of course, there is also something called negotiation tactics. This does not always have to be rational, but only seldom leads to permanent irrational results. Apart from this, after many years of a buyer’s market for commodity consumers, it can happen that the wind changes bringing a time now more in favour of a seller’s market.

More in StainlessSteelFocus October 2020