Stainless steel is the fastest growing metal: it is in many ways the perfect solution to the challenges the world is facing at the moment.
Demand for stainless steel products is impacted by global, regional and national economic conditions, levels of industrial investment activity and industrial production. The long-term outlook for stainless steel demand is positive. Key global megatrends such as urbanization, modernization, and increased mobility combined with growing global demand for energy, food, and water are expected to support the future growth of stainless steel demand.
Pricing of stainless steel products
The development of stainless steel prices impacts stainless steel manufacturers' profitability. Stainless steel prices are volatile and reflect a number of factors including:
- macroeconomic trends
- developments in industries that consume stainless steel
- the price of certain raw materials, particularly nickel
- cost of capital
- short- and long-term capacity utilization
- transportation costs
- import duties and other trade restrictions
- currency fluctuations
Prices for stainless steel generally include three components - base price, extras and alloy surcharge:
Stainless steel is sold either directly to end users or to stainless steel distributors, tube makers and processors, such as steel service centers, who resell the products to end users. The usual method of distribution for stainless steel products varies by stainless steel type and product. Distributors tend to stock stainless steel products and grades that have many end users, such as regular austenitic cold rolled products and some austenitic long and tubular products. Distributors may also stock a limited amount of hot rolled austenitic stainless steel. Factors that lead end users to purchase stainless steel from distributors can include lead times, both due to proximity to the end user and the fact that the product is in stock, and the ability to order smaller quantities. In addition, distribution is often associated with some value added services, such as slitting and polishing.
Factors that lead end users to purchase directly from the producer can include purchasing large quantities or special grades as well as the need for technical advice. Generally, large end users, such as automobile and white goods manufacturers, prefer to purchase stainless steel directly from the producer in order to develop relationships and receive volume discounts. Many ferritic applications are used in industries that have consolidated purchasing, such as the automotive and white goods industries, which generally results in more direct routes to market as compared to austenitic products. In addition, end users interested in special grades, such as duplex grades, tend to purchase directly from producers due to the customizable nature of special grades products and the producer’s technical knowledge and ability to provide advice on product selection and other matters. The tailor-made nature of special stainless steel products makes it less likely that distributors will have the specific product that the customer requires in stock.
More than half of Outokumpu’s stainless steel sales go directly to end-user customers. The remaining goes to distributors and processors that stock and process stainless steel to serve end users.