Stainless market update

[pressure9pa]

Just a note because I follow this market for my day job, prices Stainless 304 alloy sheet and plate have fallen to their 2009 Great Recession lows. For distillers, now might be a good time to dust off some plans for larger equipment that may have been shelved. For our equipment manufacturer friends, now may be a good time to put some pressure on the material suppliers. Just my $.02.

[Absinthe Pete]

Very interesting. Thanks very much as I'm a fabricator.

[Lenny]

Pressur9pa,

Do you have any insight as to why the substantial dip in stainless cost now? Just curious.

[pressure9pa]

3 main reasons:

First, nickel prices, which make up about 8-9% of 304 stainless are dropping fast. This is a traded marketplace, although only in Europe, but the surcharges the mills charge are linked to the London Metals Exchange.

Second, natural gas prices are low due to high domestic supply, which is another component of the mill surcharges.

Third, the commodity stainless market has long been dominated by a mill in Kentucky, North American Stainless. There are other mills, but since NAS is the price leader they have controlled pricing for commodity grades, leaving more specialized orders to players like AK or Allegheny. Thyssen Krupp built a mill in the South built to compete with NAS on the 400 series (430, 409, etc) that aren't important alloys to food service or people like us. However, since a recent sale to Outokompu, that mill has jumped into 300 series with both feet, giving NAS competition on price they haven't felt before.

Reasons 1 and 2 are subject to reversal from the markets, and could change quickly and dramiatically in either direction. Reason 3 is a long-term force that should play in the favor of fabricators.