October 2022 Nickel & Surcharge Update
Monthly Nickel and Surcharge Update
October 2022 Update
- 316L Surcharges rose for the first time in 3 months.
- We are projecting another increase for November.
- Nickel increased, but not as much as the energy s/c, which broke a new record.
- Remember, this is a new "cost" in 2022
- Many mills are predicting a 3x to 4x energy s/c increase in the coming months
- The EU Energy situation will absolutely worsen with winter
- The world's energy is not ready for China to end its Zero-Covid policy, yet OPEC+ is considering production cuts...
- Many informative articles below
Current Take
SECTION 232 EU TRQ: As previously reported, some EU steel was assessed the 25% tariff during Q2 and Q3. We will monitor the TRQ in Q4, as this unpredictable, hefty tax tremendously impacts pricing.
LEAD TIMES: Despite alleged softening, mill lead times are continuing to extend and all mills have further constrained capacity. Accordingly, although demand may dip, the decrease in supply will maintain the imbalance, further adding to pricing pressure.
PRICING: While alloy surcharges are far from May highs, Q4 costs will approach those levels due to:
- Base price increases
- Energy surcharge increases
- Rising nickel
- Import/Export Duties
- Supply shortages
Story to watch in 2022 (update): 2021 Energy and Aerospace demand for stainless steel and nickel alloys, while up from 2020, is nowhere near historical levels. Either sector can substantially disrupt an already discombobulated supply chain with traditional consumption.
Update: Demand for aerospace and energy-related metal continues to boom. Pricing and supply will be negatively impacted.
Yearly/Monthly 316L s/c and Ni Charts
Industry News
Click the links to read the articles below:
- Steel makers fear deepening crisis from energy crunch as output halted
- LME says it is mulling consultation on banning Russian metal
- Global gas markets to remain tight next year amid supply squeeze, energy agency says
- Factbox: Europe's crisis measures to tackle energy price spike
- Germany builds new gas terminals to succeed Russian pipelines
- EUR/USD extends daily rally, trades above 0.9900
- U.S. manufacturing nearly brakes; price pressures abating
- Aramco Says Global Oil Spare Buffers to Slump When China Reopen
- Oil prices rise ahead of OPEC+ meeting to discuss supply cuts
EU Quota Info
EU Quota System Highlights:
- Quotas by EU country, not mill, and by HTS Code, not grade
- Quarterly volumes based on a first come/first served bases
- Imported volumes > quota assessed a 25% tariff
- Exclusions apply, but adjustments under consideration
- Chaos and confusion are a certainty, clarity sometime late Q1/early Q2
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