Commodity markets can be difficult to predict and even more difficult to understand, but there are certain factors that we can usually rely on to influence to price of metals, and which we can monitor to pick up trends in the market place.
When it comes to stainless steel, the main reason for fluctuations in price is the exchange rate for nickel. This is influenced by speculation on the commodities market, which in turn is influenced by what’s going in in key nickel-producing countries such as Indonesia and Russia. Two-thirds of all nickel mined in the world today eventually ends up in stainless steel, so it’s easy to understand why any changes in the amount of nickel produced, or the overall price of nickel, has an immediate knock-on effect on the price of stainless steel.
The continuing growth of China as a world producer and exporter of stainless steel products also has a massive impact on the overall health of the industry. In 2014, China produced over half of all the stainless steel used in the world – and they did it cheaper than anyone else. The Chinese government gives the country’s steel mills free land, and doesn’t charge them rates or taxes. Interest-free loans are freely given, and are written off after five years. In addition, electricity costs are subsidised by as much as 80%.
So what does this mean for the South African stainless steel industry?
The Chinese approach to the manufacture of stainless steel makes it very hard for South Africa to compete purely on price. Instead, our main selling point is the quality of the stainless steel produced in this country. Many foreign manufacturers use a high percentage of manganese in their stainless steel, as it’s much cheaper than nickel. However, this results in a much lower grade product, suitable for domestic cookware, but not for the demanding applications of the construction and other, similar, industries.
So while South African stainless steel might be more expensive than foreign-produced products, the quality, strength and corrosion resistance means the product more than pays for itself over time.
Steelmor is a proudly South African stockist and manufacturer of quality stainless steel products. To view our full range, visit www.steelmor.co.za