Overall, the Stainless Monthly Metals Index (MMI) continued to decline, with a 4.47% drop from July to August.
Nickel prices continued to plunge throughout July, shedding an additional 4.43% over the course of the month. Although prices appeared to stabilize in early August, they continued to trend near their early 2024 range, having wiped out all gains from last quarter’s speculative uptrend.
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Service Centers Report Slow Stainless Demand
Stainless steel remains a buyer’s market. For months, stainless steel distributors have reported little optimism within the market. Sources noted slowing demand as the summer lull approached, while plunging nickel prices left buyers with zero incentive to purchase ahead amid a rapidly declining stainless surcharge. You can read more, including our nickel price forecast and buying strategy, in MetalMiner’s August Monthly Metal Outlook.
Among those reporting weakness, Ryerson’s quarterly financial results showed a slowdown in stainless steel shipments during the quarter. Although its aluminum and carbon steel segments seeked out modest growth both quarter over quarter and year over year, its stainless segment declined due to demand conditions remaining soft.
According to the report, Ryerson’s stainless shipments witnessed a sharp 4.9% decline from Q1 2024, which suggests market conditions worsened throughout the year. While summer months typically experience slower demand, Q2’s results worsened from the previous year, with a 1.7% decline from Q2 2023. Ryerson’s results echo sentiments from other distributors, which have noted soft conditions, particularly for materials like 304.
Slow End-Use Demand Drags Market
The ongoing manufacturing recession remains a drag on overall metal demand. Moreover, the ISM Manufacturing PMI showed manufacturing activity fell deeper into contraction during July, dropping from 48.5% in June to 46.8. Aside from a short-lived return to growth in March, the PMI has largely held within contraction territory since late 2022.
As a leading indicator for industrial metal demand in the U.S., the worsening results in July suggest the manufacturing sector will offer no support to metal prices in the near term until conditions begin to recover. Although the effect will be lagging, eventual rate cuts from the Federal Reserve will offer support to the overall sector.
Food service equipment manufacturer Middleby, a leading end-user for 304, continued to report challenged conditions during Q2. Overall, net sales fell 4.7% due to annual declines in all major segments. Meanwhile, commercial foodservice, residential kitchen and food processing equipment sales fell by 4.1%, 6.2%, and 4.9%, respectively.
While down on the year, orders increased from Q1, which could indicate the nascent signs of a recovery. Middleby expects growth during the second half of 2024, which will offer support to 304 demand should it come to fruition.
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Outokumpu Saw Modest Q2 Growth, Down YOY
Despite noting a “softer market environment,” Outokumpu saw sales rebound during Q2. Total deliveries increased 5% from Q1, aided by a 7% increase in North America. Rising nickel prices likely spurred additional buying activity last quarter, although that support may prove short-lived as nickel prices remain bearish.
While sales improved from the start of the year, they remained down from Q2 2023 as the overall market appears relatively weak. Outokumpu attributed part of last quarter’s softness to imports into Mexico, which the company believed disrupted “the regional supply-demand balance.”
Nonetheless, Outokumpu’s long-term outlook remained “highly positive.” However, meaningful recovery appears unlikely to occur in the short term, as the mill forecasts stable stainless steel deliveries in Q3. U.S. infrastructure efforts will remain supportive in the long term, but a more significant recovery will likely require improved conditions within the manufacturing sector.
Biggest Nickel and Stainless Steel Price Moves
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- The Allegheny Ludlum Surcharge for 316/316L coil rose 9.13% to $1.65 per pound as of August 1.
- The Allegheny Ludlum Surcharge for 304/304L coil rose 5.99% to $1.03 per pound.
- Meanwhile, Chinese primary nickel prices witnessed a 2.05% decline to $18,457 per metric ton.
- Chinese ferrochrome prices fell 2.5% to $1,337 per metric ton.
- Indian primary nickel prices saw the largest decline of the overall index, with a 6.12% drop to $16.50 per kilogram.
