Japan: Cold-rolled stainless steel market in grip of uncertainty as nickel prices jump

Uncertainty is increasing in the store sales market for nickel-based stainless cold-rolled thin sheets. At the same time, domestic prices continued to rise along with the price of imported material. The Sus304 sheet has increased by JPY 140,000/t ($1,151.60/t) since the fall of 2020.

It is inevitable that prices will reach the mid JPY 500,000/t ($4,108.90/t) level in the first half of 2022, but it is difficult to expect a recovery in demand for the time being. The turmoil in the LME nickel market that occurred in March has not subsided, and more and more people are struggling to comprehend the scenario.

Nippon Steel Stainless Steel and Nippon Yakin Kogyo have significantly increased prices since the contract in Jun'20. In the case of Nittetsu Stainless, the cumulative price increase for Sus304 sheet until this month's contract stands at JPY 200,000/t ($1,640/t) including the base price increase and also due to hike in chrome prices.

The impact of nickel prices is unavoidable in the stainless steel industry, and alternative proposals for chrome type and two-phase type, which are less susceptible to volatility in nickel prices influencing stainless steel prices, have been made.

Distribution centres secure profits by passing on material price increases, but the price reflection of soaring costs such as that of auxiliary materials, delivery, and energy remains untouched.

The current LME nickel price is treated as a reference value, but it is about 50% higher than the February average price. A simple calculation will result in a surprising amount of price increase.

However, there are a few distributors who think that manufacturers based on the raw material interlocking method will reflect the current LME price without taking any measures.

A manufacturer source said: "The scrap procurement price will remain on the upward trend considering the LME nickel market trend, but basically it will be handled by relative individual business negotiations based on the supply and demand environment. At least, in terms of sales, we have stopped spot projects and new offers in Japan and overseas for the rest of this month."

At the same time, a distribution source informed that there have been many "urgent measures such as cutting orders and skipping orders in the past. If the price rises significantly, it is a good idea to refrain from buying or to use overseas materials that are a little cheaper.

This article has been published under an exchange agreement between SteelMint and Japan Metal Daily.