Stainless steel prices set to rise as nickel turns costlier

Faced with a 15 per cent jump in nickel prices, stainless steel finished product manufacturers are considering raising prices in phases. In 2012, India’s nickel imports stood at 2.4 million tonnes (mt), before declining to about two mt in 2013.

As it is completely import-reliant, the Indian stainless steel sector revises product prices in proportion to the fluctuations in raw material prices. Depending upon the user segment, 0.5-four per cent nickel is used as an anti-corrosive agent in manufacturing stainless steel. While the utensils segment uses 0.5 per cent, high-tensile pipe manufacturers use four per cent nickel for use in oil, gas and milk transportation.

“Yes, the price rise for raw materials has a direct bearing on finished products. Since nickel prices have moved up, stainless steel manufacturers will certainly follow suit,” said Rohit Kumar, director, Indian Stainless Steel Development Association.

Nickel prices rose to $1,6078 a tonne on Wednesday, 15 per cent higher than $1,3970 a tonne early this year. In India, price increased six per cent in the last three months to about Rs 1,063 a kg. While other base metals, including copper and aluminium, have declined on weakening demand from consumer sectors, amid sustained pressure on global economic growth, nickel surged following an export ban announced by the world’s largest producer, Indonesia, two months ago.

Copper recorded a decline of nine per cent to close at $6730 a tonne. Aluminium gained 0.6 per cent in three months, closing at $1,775 on Wednesday. Sources said Steel Authority of India Ltd has already raised its flat stainless steel (pata) prices four-five per cent in the last three months. Another primary producer, Jindal Stainless Steel, might also raise prices, said sources.

  Messages to SAIL and Jindal Stainless seeking comment did not elicit any response. Utensil manufactures have been hit the hardest by the nickel price rise, despite the low use of the corrosive resistant metal in this space. Fearing cheap Chinese imports, stainless steel manufacturers have raised their products prices only marginally. “The cost of labour is the key differential between stainless steel prices in China and India. As nickel and ferro chrome (another raw material for stainless steel manufacturing) prices are determined by global factors, these remain the same for India and China.

“A sudden, huge spurt in the prices of stainless steel will invite cheap dumping from China, as has been seen in the past. We are, therefore, taking cautious steps in fixing stainless steel prices,” said Hukumraj Hundia, chairman of Indian Stainless Steel Development Organisation.

Hitendra Bhalaria, managing director of Bhalaria Metal Craft, a city-based stainless steel utensil manufacturer, said, “With labour turning expensive in China, India will now be able to pass on the high cost of raw materials to consumers.” With the stainless steel segment working to reduce the use of nickel because of its price volatility, a complete replacement will not be possible, due to the metal’s anti-corrosive property.

Ramesh Kotharia, another utensil exporter, said India would go slow in stainless steel price revision, owing to fear of cheap imports from China.