Posted on 15 Nov 2024
The wide fluctuations in global nickel prices have forced Japan's largest stainless producer, Nippon Steel Stainless Steel Corp (NSSC), to again lower and raise its two price components to smooth out the bumps for its domestic customers. The result is a Yen 5,000/tonne ($32/t) reduction in its selling prices for austenitic flat products for current month sales to distributors and service centres, the company has announced.
NSSC's domestic prices comprise a 'base' price that covers general working costs and profit, and an 'alloy link' component under which prices of alloys – principally nickel and chrome – and exchange rate changes are automatically passed on, an agreement that's been in place with domestic customers for over 20 years, Mysteel Global notes.
In its policy statement for this month issued on November 12, NSSC noted that during September and October (the representative months for NSSC's alloy price calculations this time), LME nickel prices had soared to an average of $7.47/lb, up from $7.34/lb during August-September, requiring the company to lift 300 series stainless prices by Yen 5,000/t in line with its alloy link arrangements.
In contrast, during October, as LME nickel prices had fallen from $7.41/lb during July-August, NSSC had been obliged to reduce austenitic prices by a large Yen 15,000/t.
Such a wide fluctuation in prices – over which NSSC had no control – would have seriously troubled its retail-market customers who would struggle to pass on the rapid changes to their buyers. Consequently, NSSC for November has decided to raise its base price component by Yen 10,000/t, resulting in an overall reduction of Yen 5,000/t for the 300 series stainless cold rolled sheets and coils and medium and heavy stainless plants it will sell this month.
During October, after nickel's LME plunge the company needed to slash the alloy link price part by Yen 15,000/t so in response to help its customers, NSSC had raised its base price component by Yen 10,000/t. This resulted in NSSC trimming its October prices by the same Yen 5,000/t overall.
"It is essential for the stainless steel-related industry to maintain its sustainability by implementing a highly transparent raw material price-linked system, flexibly implementing measures according to the situation, and fulfilling accountability to the market," industry daily Tekko Shimbun argued in an editorial. "The fact that Nippon Steel Stainless Steel revised its base price in the October and November contracts to smooth out the impact of volatile nickel prices can be said to be a flexible measure in response to the situation."
On the other hand, chrome prices which had remained generally unchanged at US cents 160/lb for five months, dipped slightly to US cents 157/lb during September-October. Ordinarily, NSSC would have needed to show this change in its ferritic stainless prices, but it has chosen to keep these stable for November. This is possibly because the yen has weakened against the dollar during the past month – from Yen 146=$1 in August-September to average Yen 147.6=$1 in September-October – and raising NSSC's import costs for dollar-priced ferrochrome. This cancelled out the dip in chrome prices.
Commenting on the current market situation, NSSC noted according to the latest statistics from the Japan Stainless Steel Coil Center Association, sales among member firms in September reached 49,800 tonnes, higher by 4,600 tonnes in August. Although domestic demand is sluggish, especially in the construction industry, energy-saving support measures extended by the government should boost demand for stainless from the housing-related appliances sector, it observed.
"The commercial kitchen sector is also strong against the backdrop of inbound tourism and other factors, and there are signs of a recovery in activity in the semiconductor-related field, (so) a full-fledged recovery in demand is expected in the future," NSSC believed.
NSSC never announces its stainless product list prices, but prices for SUS304 2mm thick CR cut sheet in the spot markets of both Tokyo and Osaka are at Yen 630,000/t, higher by Yen 10,000/t from October.
Source:Mysteel Global
