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July 2004

Stainless Steel & Special Alloys Committee Says Tighter Conditions Expected

The currently increased availability of scrap was unlikely to persist throughout 2004, according to experts addressing the BIR Stainless Steel & Special Alloys Committee meeting in Berlin.

The committee’s Chairman, Sandro Giuliani of Giuliani Metalli-Cronimet Group in Italy, suggested that ‘this higher scrap availability will probably not continue for the rest of the year because it is partially due to stocks that have been liquidated by now’. And in his report on the U.S. market, past chairman, Barry Hunter, of Hunter BenMet Associates predicted a return to tighter conditions in the third quarter of 2004.

While many scrap dealers were talking in terms of a shortage of scrap, figures collected from European steelworks indicated that availability had improved by as much as 15% in 2003 and by a further 15% in the first quarter of 2004, said Mr Giuliani. The external scrap ratio had averaged 37.2% last year but would probably exceed 38% in 2004.

World production of stainless steel had grown by 7% to 22 million tons in 2003 and European mills remained bullish about prospects for 2004 despite uncertainty surrounding the effects of EU enlargement and steps taken by the Chinese authorities to curb their overheating economy, according to Mr Giuliani.

Mr. Hunter spoke of the ‘domino effect’ created by the economic measures recently adopted by China, leading to a substantial fall in scrap purchasing prices. Strong melt programd were still reported from the U.S., with North American Stainless - the nation’s leading scrap buyer - continuing to melt near capacity.

This generally upbeat tone was also echoed in the presentation prepared by Stuart Freilich of Universal Metal Corporation in the U.S. Build rates in the aerospace market had been higher than anticipated and sales were expected to grow by as much as US$ 10 billion during 2004. Analysts were forecasting ‘many good years of business ahead’, he added.

In an overview of the stainless steel market in Russia, Ildar Neverov of Teplovtorresource said domestic plants had been unable to purchase sufficient quantities of scrap owing to the higher prices available on the export market and to non-payment of suppliers. Having called for a removal of ‘discrepancies and contradictions’ within Russia’s metals-related legislation, Mr. Neverov noted his country’s 15% export duty on stainless steel scrap and predicted customs duties would soon be in line with World Trade Organization requirements.

According to the guest speaker at the BIR Stainless Steel & Special Alloys Committee meeting in Berlin, China was expected to double its stainless steel cold rolling capacity by 2007 while Central/Eastern Europe harbored ‘terrific growth potential’ for the consumption of cold rolled flat products. Jan Bender, Head of Sales Coordination at ThyssenKrupp Nirosta GmbH in Germany, went on to warn that stainless steel manufacturers were unable to pass on all of their raw material cost increases and that ‘clients are beginning to look around for alternative materials’.

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