The Stainless Monthly Metals Index (MMI) remained sideways, but continued to slide. Overall, the index fell by 0.72% from January to February as nickel prices remained consolidated.
Bearish Conditions Continue to Haunt 304 Stainless
The chaos of tariffs seems lost on large portions of the stainless steel market. For many, the return of a blanket 25% duty on all aluminum and steel imports has had a significant short-term impact. Sources from the aluminum market reported rapid-fire price jumps as concerned buyers rushed back into the market. However, that is not the case for 304 stainless.
Even in the face of tariffs, slow demand has meant business as usual for standard forms of stainless steel, with no evidence of a shift in market conditions.
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Meanwhile, domestic mills reacted to news of tariffs with caution. In its most recent financial report, Outokumpu noted, “Proposed tariffs by the President of the United States could boost demand but also pose risks of inflation and reduced consumer demand.”
Historical analysis of markets like aluminum shows that trade barriers have only a short-lived bullish impact on exchange prices. During the imposition of tariffs in 2018, aluminum prices rose roughly 15-20% before finding a peak and returning to their previous trends within 6-12 months.
Tariffs: Impacts and Potential Risks
Specialty steel grades that rely more heavily on imports might be in panic mode, but the tariff announcement has had no meaningful impact on standard grades like 304 and 316. Ultimately, demand remains too weak to support price increases from mills and distributors.
While countries that had previously benefited from carve-outs and separate trade deals like Mexico, South Korea and members of the EU will see impacts from the duty, other major suppliers like Taiwan, Vietnam and Indonesia will not, as the duty already applied to them. It is worth noting that oversupply from Asia has played a significant role in suppressing global stainless steel prices.
The more significant risk of tariffs is to the manufacturing sector. As MetalMiner often repeats, “High prices kill high prices.” January saw the ISM Manufacturing PMI return to growth for the first time since April, and markets appeared hopeful those results would prove the nascent signal of a recovery in the long-recessed manufacturing sector.
However, price jumps across several industrial metal markets combined with sticky inflation, which will preclude rate cuts by the Fed and pressure consumer demand, could derail such a trend.
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Outokumpu Tosses Expansion Plans
Back in 2023, Outokumpu maintained a hopeful outlook for the U.S. market. Expecting a boost from infrastructure efforts, the mill started planning the expansion of its cold rolling capacity in the U.S. beginning in 2026. However, Outokumpu canceled those plans in mid-February of this year.
While tariffs could place a cap on imports, they may also serve to place a cap on consumer demand. Alone, they do not appear sufficient enough to trigger a significant turnaround in market conditions.
According to Outokumpu’s February 13 announcement, “Import penetration, mainly from Asia, into the North American market has nearly doubled during the past five years, and this has clearly impacted our decision not to increase our production capacity at this point.”
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Q4 Stainless Deliveries Fall to Historical Low
Against the backdrop of shifting trade policies, 2024 closed on a low note for the stainless steel market. Outokumpu’s Q4 financial results painted a bearish picture, with stainless steel deliveries dropping to their lowest level in years and its adjusted EBITDA plunging to EUR -3 million.
Outokumpu characterized the market as “challenging,” acknowledging “a weak market with high import pressure.” Though conditions in the Americas outperformed Europe’s, both markets appeared weak. The European market remains plagued by uncertainties, with subdued demand from leading end-use sectors like automotive and home appliances.
As a result, distributors throughout the continent held back on buying, keeping inventories lean and approaching restocking efforts with caution. Bearish conditions saw Outokumpu’s European stainless steel deliveries drop 9.18% from the previous quarter and 12.23% from the previous year.
Meanwhile, weak manufacturing activity in the U.S. placed a significant cap on demand, though the energy and shipbuilding sectors offset this somewhat. Still, bearish conditions forced domestic mills like Outokumpu to operate at lower utilization rates and make increasingly competitive offers to maintain sales.
While the mill’s aggressive approach helped Q4 2024 stainless deliveries in the Americas rise 5.38% year-over-year, they trended down from Q3, falling by 7.43%.
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Outokumpu Expects Better Q1
Despite its lackluster financial results, Outokumpu showed tempered optimism for Q1 2025. According to the mill, “Group stainless steel deliveries in the first quarter are expected to increase by 10–20% compared to the fourth quarter.” Historically, Q1 typically witnesses a seasonal increase in demand as manufacturers begin restocking for the new year.
While increased demand may help Outokumpu leverage more of its capacity, that increase will likely have no meaningful impact on prices. According to the mill, “pressure on realized stainless steel prices is expected to continue during the first quarter.” This outlook appears to echo the sentiment of distributors, who report ongoing weakness despite the recent turbulence in global trade relations.
Biggest Moves for Stainless and Nickel Prices
- Korean 304 2B coil prices rose 3.27% to $2,403 per metric ton as of February 1.
- Chinese nickel scrap prices witnessed a modest 1.47% rise to $17,263 per metric ton.
- Meanwhile the Allegheny Ludlum surcharge for 304/304L coil prices declined 1.66% to $0.90 per pound
- The Allegheny Ludlum surcharge for 316/216L coil fell 1.97% to $1.44 per pound.
- Chinese ferrochrome prices experienced the largest decrease of the overall index, dropping 3.71% to $1,090 per metric ton.
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