Stainless steel prices are observed to have increased due to the rise in alloy extras in the
Far East and
Europe. What has triggered the rise in the
stainless steel prices, which has broken record price levels again and again and caused end-users great difficulty? It does not seem possible to answer this question with a short and simple reply. We may list the reasons for the increases according to their importance as follows:
1) First of all, the increase in the use of energy resources, such as oil, natural gas and certain metals due to the strength of economies across the world, has increased the prices of these resources. The countries which profit from these price increases have invested their increased wealth in their domestic economies and in the economies of developing countries. Due to this acceleration of financial input,
consumption of
longs,
flats and
stainless steel products have increased. Added to the rise in prices, the fact that many firms, including Mittal Arcelor, ThyssenKrupp and POSCO, announced that they expect prices to rise further exerted a psychological pressure on buyers to complete further purchases, thus further strengthening the market. The strong demand resulted in capacity increases which caused nickel stocks to decline significantly. As a result, nickel prices reached a level of $44,495/ton level. This rise is the most important reason for the increase in
stainless steel prices. Due to the increases, many firms have invested in nickel, approaching the commodity with a stock exchange mentality. These purchases caused a decline in the nickel volumes needed for
production.
2) The soft weather conditions as a result of global warming have allowed
construction and transportation activities to continue uninterrupted. Since it is globally predicted that business activity levels will increase with the coming of spring, stockists and steel service centers generally give their orders for materials needed two months in advance. However, this year purchases started sooner with the early-arrival of spring..
3) A worldwide imbalance has been caused in
consumption of
stainless steel and raw materials due to the fact that countries such as
China,
Russia,
India,
Brazil,
Turkey, North
Africa,
Iran, new EU members, Dubai and
Qatar, and oil-rich countries, all have developing economies and that they consume high-amounts of steel and that the per capita steel
consumption in these countries is rising. This imbalance still continues due to incomplete raw material
investments and problems faced in raw material
production.
4) Finally, looking at the
stainless steel industry, we see the emergence of a general consensus that worldwide
stainless steel
consumption will increase till 2010 and that the market will strengthen further. The fact that interest and
investments have increased in this industry as a result of this consensus has made the industry popular worldwide and contributed to the continuation of the incredible rises seen in the industry in the last 12 months.