US Cold-Rolled Stainless Steel Imports Surge Despite Shipping Costs

According to the US Metal Miner on July 8, 2024, the overall Stainless Steel Monthly Metal Index (MMI) has reversed its downward trend, falling by 10.88% from June to July.

Nickel prices suffered significant losses in June, with a drop of over 14%, earning the title of the worst-performing base metal. Prices have fallen by more than 19% from their peak on May 20th, as they continue to search for a new bottom.

Bear Market Leads to a Significant Drop in Stainless Steel Prices

Throughout June, the bearish sentiment continued to echo in the stainless steel industry. Distributors and brokers reported an oversupply in the market, with buyers remaining uninterested in increasing their inventory.

Sources also indicated that the outlook for an improvement in demand is not optimistic. Although some still hope for a typical seasonal rebound in the fall, it seems unlikely to achieve year-on-year growth, as uncertainty remains a constant factor in the market.

Despite the gloomy outlook that has plagued the stainless steel market for over a year, steel mills continue to hold the base price. According to sources, steel mills do not believe that lowering the base price will translate into higher demand, giving them no incentive to formally adjust prices. Instead, steel mills plan to wait for the current market dynamics, hoping that buyers will return when the Federal Reserve begins to cut interest rates and more infrastructure projects start.

Despite Rising Shipping Costs, Cold-Rolled Stainless Steel Imports Still Increase

Despite weak demand, US cold-rolled stainless steel imports have surged since the end of 2023. The total monthly transaction volume jumped nearly 65% from the low point in November 2023 to the level in May 2024.

It is worth noting that the overall trend in April approached the level of 2021, which was when demand surged after the pandemic, forcing steel mills to start rationing due to supply shortages.

At first glance, the increase in imports is a strange phenomenon. The current market conditions in the US remain weak, and longer delivery times and higher shipping costs are considerable disadvantages for import demand.

Statistics show that from December 2023 to May 2024, the global container freight index soared by nearly 155%, eroding the competitive advantage of import prices compared to domestic counterparts.

Vietnam Follows Carbon Steel, Increasing Total Import Share

However, not every exporting country has experienced the same degree of increase. Further observation of the data shows that exports from Vietnam seem to have grown disproportionately.

Since 2018, the monthly imports from Vietnam have averaged about 5.77% of the total cold-rolled stainless steel imports. However, in April and May, Vietnam's share rose to 10.26% and 8.88%, respectively, approaching the level when China was still in the zero-COVID lockdown period. It is worth noting that carbon steel has also seen a similar trend since the beginning of 2024.

It is too early to say whether the increase in imports from Vietnam will become a sustained trend rather than a temporary anomaly. However, considering the country's issues, this may indicate China's dumping efforts.

Summary

Due to tariffs, cold-rolled stainless steel imports from China remain a negligible part of the total volume. However, China's share in the total volume has also increased. Since 2018, the average monthly imports from China have accounted for about 0.06% of the total volume. In the first five months of 2024, this average level jumped to 0.2%. Although China's total volume seems insignificant for the US domestic stainless steel supply and market impact, the disproportionate growth indicates that China's demand situation seems weak enough for prices to overcome US tariffs.

The remaining supply in China far exceeds the amount entering the US and what China can consume. This puts other countries like Vietnam in a difficult position. As Chinese materials continue to enter the global market, the constant result seems to be a negative impact on global prices.