Stainless Scrap under Heavy Price Pressure

The global stainless steel industry in general and Europe’s in particular are facing one of the most challenging times in years.

Apart from the current trend towards applying tariffs and duties on all kinds of product throughout the world, it is mainly the significant investments in stainless production capacity in Indonesia that are threatening the industry. These investments are based on the use of very cheap raw material units which appear to give significant cost advantages. These cost advantages are used to reduce the price of the final product in order to gain market share. In a first step, annual capacity seems to be around 2.5 to 3 million tons, with this figure to rise to 8 million tons in the coming years. As a comparison, liquid output in the EU is around 7.3 million tons per annum.

As a result, all stainless producers outside of Indonesia are coming under extreme price pressure. Consequently, the relative price level for stainless scrap throughout the world is also under heavy pressure. Needless to say, this is impacting on the flow of material throughout the complete value chain.

From an environmental perspective, it is a shocking development that stainless steel produced without environmentally-beneficial scrap is able to endanger an entire industry, which has proved itself capable of operating at the highest recycling rates and in an environmentally-friendly way.