The short-term outlook for the US stainless steel sector is quite optimistic.
The demand is especially high from the side of car and home appliance manufacturers However, concerns remain as to whether this growth is driven by deferred demand or a more sustained increase in basic needs. Therefore, many buyers still do not want to make speculative purchases and continue to place orders only for urgent needs.
Inventory levels in the US stainless steel market are low after several months of declining stocks in the distribution sector. This happened at the same time that many manufacturers were cutting inventories at their factories.
Consequently, the recent recovery in demand has led to a shortage in the market for some steel products. This has boosted mill sales as buyers try to replenish their depleted inventories. However, due to the fact that several stainless steel producers are still operating at reduced capacity, delivery times are increasing.
The mill’s order books are reportedly full by the end of this year, with very little production capacity remaining for January orders. One of the domestic steel companies has already announced deliveries in mid-March for certain commodity items. Market participants are questioning whether the increase in delivery times is a result of improved orders, lower production volumes, or that steelmakers are experiencing delays in raw material availability.
Mills are unlikely to ramp up production to pre-pandemic levels until a clearer picture of medium-term demand emerges. Consequently, distributors are increasingly concerned that they will not be able to replenish stocks quickly enough if there is a significant surge in demand in the new year.
Many buyers are concerned that with such long delivery times, the material ordered now could create an oversupply if demand cannot be improved. However, the current market environment presents favorable pricing opportunities for US stainless steel mills.
Therefore, it is very likely that an increase in the base price will be announced in the near future. Moreover, alloy premiums will boost sales of 300 Series stainless products in December.