Access to competitively priced raw materials is a major challenge for the European stainless steel industry, Antonio Marcegaglia, CEO of Italian steelmaker Marcegaglia, told delegates at the SMR Stainless Steel conference in Rome on Sept. 17.
"We still face tight scrap availability, while nickel pig iron is gaining momentum as a competitive input because of the tight availability and high price of [stainless] scrap -- and even if NPI is environmentally unfriendly and with LME nickel prices reducing, it's something to wonder about," Marcegaglia said.
The London Metal Exchange Nickel Cash Daily settlement price was $15,950 per metric ton on Sept. 16, down sharply from a year-to-date peak of $21,275/t on May 21.
Platts, part of S&P Global Commodity Insights, assessed nickel pig iron with 10% nickel content at $121.50 per metric ton unit FOB Indonesia on Sept. 17, unchanged on the day but down from $124/mtu at the start of September.
"We have also noticed that internationally, and even for Asian producers, the main concern is upstream integration towards more and more competitive input," Marcegaglia said. "So raw materials are an area where the industry needs to think to recover competitiveness."
Marcegaglia emphasized the need for the European stainless industry to balance adherence to decarbonization with profitability, adding that "it should not be a mantra without realism."
"CO2 content within stainless steel is high because of ferroalloys and this is hard to abate -- we are already using a lot of scrap and it could be improved but I believe that [scrap use] is highly optimized and the effort for further marginal increase may be very costly and we have to balance that out," Marcegaglia said.
Other market participants at the SMR conference told Commodity Insights that Scope 1-3 CO2 emissions per 1 t of stainless steel could be as high as 5-10 t for producers using NPI as an input, compared to around 2 t CO2 emissions for production with high scrap input.
"The European carbon border adjustment mechanism [CBAM] remains very complex -- it could be dangerous and not so effective as the huge price cost gap between us and Asia and needs to be carefully considered," Marcegaglia said. "The [finished steel] price gap between domestic markets in Europe and Asia has been as high as $1,000/mt, if not more -- it's unprecedented and despite significant duties, we remain under pressure for competitiveness."
Platts assessed grade-304 2mm cold-rolled coil at $2,130/t CFR East Asia on Sept. 13, down $10 on the week. The Platts assessment of September European domestic alloy surcharges published by European mills for grade-304 cold-rolled coil ranged between Eur1,999-2,051/t ($2,204-$2,261/t) on Sept. 10.
While use of the 'alloy surcharge plus base price' pricing model has receded somewhat in Europe, the comparison highlights the wide price gap between Europe and Asia for finished stainless steel.
European stainless steel exports totaled 846,431 t in 2023, according to Eurofer, down sharply from a recent peak of 1,869,920 mt in 2012.
Marcegaglia attributed the decline to a lack of competitiveness from Europe-based producers, who have higher raw materials, energy, labor, transport and capital costs than Asia-based producers.
