Over the first half of 2014, the stainless steel scrap market has been very strong thanks to a period of rising nickel prices and a strong US demand for scrap. The country is now home to four major producers of stainless steel.
A number of interrelated factors over the last several months have kept the market for stainless steel scrap strong and the price of nickel, a key component in the creation of stainless steel, high. One major factor has been a redistribution of stainless steel production capacity in Europe and the United States. Many European mills are either closing or cutting back on capacity, but in the US, the ramp-up of an additional stainless melt shop in Calvert, Alabama has increased the need for scrap to reach unprecedented levels.
Demand for scrap from US mills has reportedly slowed down since late August reportedly due to a decrease in production at the Alabama melt shop. A number of industry insiders remain positive about what they say is one of this years hottest metals markets in the recycling industry. They also claim that the stainless steel scrap business tends to mirror the overall confidence level in the US economy, which is currently upbeat.
A key question, potentially affecting nickel levels and prices on the London Metal Exchange (LME), is whether or not the US, which is the worlds largest producer of stainless steel, will find it necessary to use more scrap from the international market.