Current situation:

• US stainless-steel output likely increased by 50,000 tons to 2.85 million tons in 2018. MEPS expects output growth to trend moderately upward at 2% in 2019.
• Global consumption rates are expected to absorb this additional output, keeping prices stabilized in 2019 based on current global manufacturing and economic growth forecasts.
• Input prices into stainless PFF are mixed. LME nickel inventories hit 6-year lows again in April at just below 179,000 tons (193,000 in the last update), a continued downward trend.  Spot nickel prices were trading in the $5.87/lb. range in mid-April ($5.86 in the last update). There is nothing suggesting a return to the 2018 peak of just over $7/lb. hit in June, but little to suggest another December trough of $4.81/lb.

Key factors that could affect supply or price:

• China has imposed anti-dumping measures on stainless steel from the EU, Japan, South Korea and Indonesia.  EU exports to China are up 43.5% Y/Y.
• Chinese new home prices improved – boosting optimism and pushing prices slightly higher for construction materials in early April.
• As mentioned last month, global demand has softened enough in Asian and European markets to keep prices softer. Manufacturing demand was expected to improve in the coming quarters but there has been more skepticism regarding that growth as Europe and China face slowing economic growth.
• MEPS forecasts global stainless-steel output will rise 4.7% in 2019, weaker than the 2018 output estimate of an increase of 7.6% Y/Y at 51.75 million tons. Yet, if these estimates hold, it would still remain a record year for global output.