The complex interaction between nickel and stainless steel markets is the subject of comments by economist Jim Lennon at the Outokumpu Experience. An analyst of stainless steel and nickel markets for more than three decades, Lennon will speak on the impacts of price volatility, trends and policy changes.
Using low-grade imported ores, he says, China’s rapid rise as a producer of stainless steel has been a major disruptive factor on the global stainless steel market. “Because nickel produced in China was cheaper,” Lennon notes, “Chinese stainless steel makers had a huge competitive advantage.”
But a 2014 ban on ore exports by Indonesia – China’s major supplier – is a game changer. “The markets are now in the middle of an adjustment,” Lennon says. “At some point, China will lose its competitive advantage, and that will have an impact on the global market.”
The volatility of nickel prices cascades through the global stainless steel industry. With nickel representing as much as 60 percent of the cost of stainless steel production, market trends are of critical importance to producers and customers alike.
“For stainless steel producers, this is one of their biggest headaches,” Lennon says. “In creating alternative pricing mechanisms, Outokumpu is at the forefront of stainless steel producers around the world seeking a way to manage volatility.”