http://dx.doi.org/10.

17159/2411-9717/2018/v118n6a1

Changing nickel and chromium stainless

steel markets — a review
by H.H. Pariser, N.R. Backeberg, O.C.M. Masson, and
J.C.M. Bedder

markets, with historical data as of 19 January

$64,585 2018. The data presented in this paper is
This review covers the changing fortunes of the nickel and chromium sourced from Roskill Pariser Steel Alloys and
markets, which are intimately tied to stainless steel production. Over the Roskill Information Services, unless stated
last few decades, growth in the stainless steel market has outpaced that of otherwise. It includes certain statements that
the carbon steel, aluminium, copper, and zinc markets, and as a result, may be deemed ‘forward-looking’.
demand for nickel and chromium has benefited. The emergence of China as Although we have made every reasonable
the world’s largest stainless steel producer – estimated at 54% of world effort to ensure the veracity of the information
supply in 2017 – means the country needs increasing quantities of chrome presented, we cannot expressly guarantee the
ore: Chinese imports increased by 29% year-on-year in 2017. The dynamics
accuracy and reliability of the estimates,
of the chrome trade are heavily skewed towards South Africa and China, but
forecasts, and conclusions contained herein.
how long will this continue? The sheer size of China’s stainless steel
industry means that it is also the largest consumer of primary nickel, thanks
Accordingly, the statements in the
to the industry’s reliance on primary units, mostly in nickel pig iron. We presentation should be used for general
estimate that stainless steel production accounted for 68% of global primary guidance only.
nickel demand in 2017, but this ratio is set to decline in the years ahead as
the increased electrification of automotive transport leads to higher 3286.955:5399.
requirements for nickel in batteries.
Stainless steel has been one of the fastest-
;9$47/5 growing metal products over the past decades,
stainless steel, nickel, chromium, ferrochrome, scrap. outperforming carbon steels and aluminium as
well as other base metals, owing to rapid
growth in demand from sectors such as
6374/1-3846 construction, transportation, and consumer
products (Figure 1).
Stainless steel remains the principal end-use
Stainless steel demand in the 1950s to
for chromium and nickel units. Stainless steel
1970s was defined by the post-war
is a generic term for corrosion-resistant alloy
reconstruction period. Before the 1960s, the
steels containing 10.5% or more chromium. In
US stainless steel market was leading global
the AISI (American Iron and Steel Institute)
development, until a few stainless steel
classification of steels, stainless steel must
producers in Japan and in Europe steadily
contain 10% or more chromium; in the BSI
increased their market shares to overtake the
(British Standards Institution) classification, it
USA in the late 1960s. Prior to 1980 China
must contain 11.5% chromium or more. The
had been sporadically melting stainless steel,
addition of 10% chromium to a steel gives
but only became a noteworthy supply source
corrosion resistance in mild environments;
from the year 2000 onwards.
additions of over 18% chromium give
In recent years, China has developed into
protection in more aggressive environments in
the global market leader, thanks to the rapidly
the chemical, petrochemical, process, and
growing Asian stainless demand and China’s
power industries. Nickel is mostly added to
capability of meeting this demand with
improve the formability and ductility of
‘unconventional’ raw material usage – in
stainless steel. In 1960, nickel demand in
particular nickel pig iron (NPI), but also due to
stainless steel was 219 kt, accounting for no
more than 34% of the global nickel demand.
This grew to a 68% market share in 2017,
accounting for approximately 1470 kt of
primary nickel. Alloying with these elements * Roskill Pariser Steel Alloys, UK.
© The Southern African Institute of Mining and
brings out different crystal structures in
Metallurgy, 2018. ISSN 2225-6253. This paper
stainless steel to impart different properties in was first presented at the INFACON XV:
machining, forming, and welding. International Ferro-Alloys Congress, 25–28
Roskill Pariser presents a market review February 2018, Century City Conference Centre and
for the nickel and chromium stainless steel Hotel, Cape Town, South Africa


   

 

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Changing nickel and chromium stainless steel markets — a review

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state-supported capital expenditure on modern stainless years. Demand growth in developing and emerging countries
steelmaking equipment. amounts to some 6.3% annually, which is more than twice as
Japan has become a technology leader in a range of fast as in industrialized countries.
stainless steel applications for the automotive industry and
various other consumer goods, while European stainless steel
producers have focused on a wide range of applications in
equipment used in demanding environments such as
chemical plants, power stations, and other industrial
applications, as well as household appliances, consumer
goods, and automotive parts.
In the USA, market performance has been relatively
steady over the last five years. In contrast, the performance
in Japan has been more volatile, while China’s stainless
output resumed its upwards path in 2016 and 2018,
following a modest decline in 2015. In 2017, we estimate that
China accounted for 54% of world crude stainless steel
production.

"!  "!!"!""

It is a hopeless task quantifying the thousands of different
applications for stainless steels. The top five end-use
segments, which we outline here, account for some 77% of
the recent markets. )80179:'%$,8-2.:96/159:5371-3179:86:86/153782.89/:26/:/9 9.4,860
The dominant end-use applications for stainless steels are 26/:9+970860:-41637895
still in machinery and equipment, followed by basic metals as
well as fabricated metal products. These three product groups
account for some 58% of the aggregated market volume in
industrialized countries, while in developing and emerging
countries their share is as high as 69% (Figure 2). Motor
vehicles play an important role in industrialized countries,
accounting for some 12.4% while their ratio in developing
and emerging countries is not more than 5.3%.
One market segment with a strong regional application is
architecture, building, and construction (ABC). Globally, ABC )80179:2%980(39/:53286.955:5399.:/9+26/:86/9:86:86/153782.89/
accounts for some 13% of stainless steel consumption, but -41637895
we observe wide variations on a regional basis. Japan, for
instance, has traditionally had a strong preference for
stainless steel roofing and bath tubs, but these applications
are rarely found in European countries.
We follow quarterly stainless supply and demand
volumes, which show an almost steady performance
reflecting the stabilizing impact from the steady growth
performance of China. In earlier decades, the market went
through significant fluctuations due to stocking and de-
stocking activity. The two diagrams in Figure 3 illustrate the )80179:%980(39/:53286.955:5399.:/9+26/:86/9:86:/9 9.4,860:26/
developments in stainless steel demand over the last seven 9+970860:-41637895


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Changing nickel and chromium stainless steel markets — a review

"!""! "!! "!" size is the electrification of the automotive industry. Nickel
demand will benefit not only from the substitution of internal
One of the key reasons for the steady demand growth in
combustion engines in cars by lithium-ion batteries, but also
stainless steel is relative price stability. Stainless steel prices
from changes in battery chemistries towards increasing
are published by various sources, but we found that our own
concentrations of nickel, which will give the market an
evaluation of service centre sales prices provides a more
additional boost, primarily from nickel sulphates. The details
realistic picture of the market over the past 6–8 years.
of this research have been recently published in Roskill’s
In our opinion, the lack of reliable price information is a
broader battery materials analytics and bespoke research.
major handicap for the global stainless steel market. Modern
The changing product mix is marginally influencing the
price hedging under the prevailing circumstances is hardly
Class I nickel segment, including carbonyl nickel pellets,
possible.
electrolytic nickel cathodes, and briquettes, expanding by
We have followed stainless steel prices regularly since
only 1.2% per annum over the same period, and reaching a
1967, the first year that a generally accepted definition for
level of some 1 Mt by 2027.
stainless steel was introduced. Since then, nominal stainless
Class II materials are primarily applied for stainless steel
steel prices have remained within a narrow range, close to
melting and include the classical ferronickel qualities, but
the 1967 base year (Figure 4). Major price increases occurred
also utility nickel, nickel oxide sinter, and NPI. This product
during periods of high nickel prices, as was the case in 1989–
group is expected to expand by 4.9% per annum between
1990 and again two decades later in 2008–2010. However,
2017 and 2027 to 1.7Mt.
stainless steel prices have usually weakened again after the
Overall, nickel supply might need to reach some 3.1 Mt
short high-price periods. In contrast, since 2005 stainless
by 2027, 1 Mt more than in 2017, to keep up with rising
steel prices have stabilized above the base year value in a
demand, particularly from the batteries sector. For 2018 we
range of some 120–130 index points.
assume a market volume of nickel at approximately 2.1 Mt.
A price comparison with other commodities shows that
Electrolytic nickel cathodes should remain the main product
iron and steel prices have outgrown stainless steel prices
group, followed closely by NPI, both accounting for around
significantly, while prices for non-ferrous alloys, which
600 kt. Ferronickel is the third largest product at 450 kt, with
include mostly copper alloys and aluminium, have also
nickel briquettes accounting for just over 200 kt. The balance
outperformed stainless steel.
includes nickel oxide sinter, carbonyl nickel pellets, and
sulphates (Figure 5).
8-9.
 ('(!$$' (%&(%!'$
('$(' %(#"&' &( "!
! !!
 The development of the NPI market enabled China to feed its
rising stainless steel production. NPI output grew strongly
China has developed into the largest market for primary between 2005 and 2014 but slowed from 2015 onwards,
nickel. The country is forecast to account for almost 57% of primarily due to lack of sufficient feed material. Production
global nickel consumption in 2018. The second largest has moved back to over 100 kt per quarter recently as the ore
regional market is the European Union accounting for 13.5%, availability has started to improve.
whereas markets combined under ‘Other Asia’ rank third Over the years, Chinese producers of NPI have changed
with a global share of almost 10%. All other regions remain their product mix. Almost 80% of the current output consists
well below the 5% market position. of high-grade materials containing more than 10% Ni, while
Primary nickel markets have been divided into Class I and low-grade materials with no more than 2% Ni have
Class II materials, and chemical products used in the battery diminished to approximately 20%. Medium-grade NPI,
industry. We forecast the use of primary nickel in batteries to containing 4–6% Ni, was popular at the beginning of the
rise by an average of over 20% per year between 2017 and decade, when it accounted for some 30% of the total NPI
2027. The scale of growth reflects not only the expect size of output, but this market has virtually ceased to exist, falling
the market a decade from now, but also its current small size. below 1% in 2016.
The main driver behind the forecast increase in this market’s

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Changing nickel and chromium stainless steel markets — a review
"! "!"""!"! ! 
Historically, charge chrome production has significantly
outweighed HC ferrochrome production in terms of tonnage,
Nickel prices went into 2016 at particularly low levels, of
following a growth of 7.3% per annum since 2000, whereas
around US$8 000 per ton. However, as the market began to
HC ferrochrome grew slightly slower at 5.4% per annum
tighten after several years of chronic oversupply, prices
(Figure 7).
began to improve. In the second half of 2016, prices were
Power supply restrictions have favoured the use of HC
comfortably over the US$10 000 per ton level, and traded
ferrochrome, which is expected to grow at 3.3% per annum in
within a range of around US$9 000–11 000 per ton until the
the long term to 2030, compared to a 2.2% per annum
third quarter of 2017 (Figure 6). Since then, however, the
growth in production of charge chrome.
growing realization that the strong prospects for nickel
demand in batteries should sustain strong demand growth,  "! "
coupled with a continued market deficit, has supported a
World mine production of chromite closely follows trends in
further price appreciation. By early 2018, the LME nickel
ferrochrome production, which accounts for nearly 90% of
cash price had approached the US$13 000 per ton level. One
consumption. Chrome ores are mined globally, but output is
factor that could hold back prices is the stock that was
highly concentrated in terms of both geographical area and
accumulated during the recent period of sustained market
producing countries. Since 2007, the supply volumes have
surpluses.
expanded by 3.6% annually, and are expected to reach
almost 37 Mt in 2018.
#(74+81+ Five countries produce more than 1 Mt/a of chromite.

%&#&(!#%(&''(%"(#("&%$'""("&''$ The expectations in 2018 are for South Africa to account for
60% of world output, including production from the UG2
From a stainless steels producer’s point of view, two types of
Reef. Kazakhstan (13%), India (9%), Tukey (4%), and
chromium ferroalloys are to be distinguished: charge chrome
Finland (3%) are the other major producers. In total, these
and the high-carbon (HC) ferrochrome (FeCr). In a stainless
five countries accounted for 89% of chromite production. In
steel mill, most of the required ferrochrome is added directly
South Africa, the contribution of UG2 chromite is estimated
into the electric arc furnace (EAF), with the stainless
to account for over 10% of the annual supply.
producer having the choice of adding either charge chrome or
Exports of chrome ore from South Africa reached almost
HC ferrochrome. When the steel has been decarburized and
12 Mt in 2017, of which 11 Mt were directly and indirectly
tapped from the EAF, the stainless producer will then usually
supplied to China. Shipments from South Africa ramped up in
add a small amount of medium-low carbon (MLC)
2005–2008 as China’s stainless steel boom set in, to an
ferrochrome to ‘trim up’ the chrome specification of the steel.
average 425 kt/month until 2012. Exports grew to 700
There are usually significant differences between the
kt/month in 2013, but settled back to 590 kt/month in 2014,
levels of certain impurities present in charge chrome vis-à-
with less than 66% shipped to China in that year. Since
vis HC ferrochrome, especially silicon. The scrap ratio used in
2015, monthly exports have increased sharply to an average
stainless steel mills has a significant effect on the type of
of 970 kt by 2017.
ferrochrome consumed, as there are almost always far more
The natural counterpart in the trade of chrome ore is
impurities in all grades of ferrochrome than in stainless steel
China’s rapidly expanding stainless steel industry, which
scrap. The use of scrap also has significant impacts the
obtains the bulk of its chrome ore from South Africa
quantity of primary ferrochrome consumed.
(approximately 72% in 2017). Minor chromite deposits are
Charge chrome contains some 50% chromium and 6–8%
available in China, but the country’s large stainless steel
carbon, and is primarily applied for stainless steel melting. In
industry is dependent on imports. Other important suppliers
Asian countries – particularly in China and India – HC
of chromite to China include Turkey, Albania, and Pakistan
ferrochrome grades are predominantly produced, typically
(Figure 8). According to preliminary 2017 data, China’s
containing 60–70% chrome and varying carbon contents.
chrome ore imports expanded last year by 29%.

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Changing nickel and chromium stainless steel markets — a review
 South Africa has a cost advantage of 17.7 US cents per
pound Cr when it comes to chrome ore input
 There is a disadvantage of 4.1 US cents per pound Cr
for South Africa in reductants and other cost
components
 Energy costs in South Africa are 7.4 US cents per
pound higher than in China
 Semi-fixed costs of 5.94 US cents per pound compare
with those of China at 2.89 US cents per pound
 Aggregated total direct cash cost in South Africa last
year amount to 54.11 US cents per pound, while
China’s total cost amount to 75.76 US cents per pound.

 "! "! "!

Ferrochrome prices follow broadly similar trends to chromite
)80179:% 97209:+463(.$:#(86959:8+,4735:4":-(74+9:479:"47:'&* prices and are broadly cyclical, reflecting trends in the
26/:'&*! stainless steel industry, although with a time lag. The past
two years have seen numerous price swings in the chrome
ore and ferrochrome markets. Prices for chrome ore roughly
quadrupled over the course of 2016, remaining extremely
"  "!  high in early 2017 before falling substantially in Q2 and
We estimate last year’s global ferrochrome production at bottoming out in Q3 (Figure 10). Prices have recovered
approximately 11.7 Mt. Three countries produced more than slightly as of early 2018, with UG2 ore (42% CIF China) at
1 Mt of HC ferrochrome/charge chrome in 2017. China and US$206 per ton in January 2018, compared to the US$395
South Africa together accounted for 68% of the total output, per ton high experienced in January 2017. Ferrochrome prices
with Kazakhstan contributing a further 12%. India fell just have largely moved in tandem with ore prices over this
below the 1 Mt mark (Figure 9). Ferrochrome prices have period, though the changes both up and down have been
largely followed ore prices, although the changes both up and more subdued.
down have been more subdued.
In 2016, demand for ferrochrome increased to 11.1 Mt, 3286.955:5399.:5-72,
followed by another expansion to 12.5 Mt in 2017. For the
'(' $'!&' (!## %&
immediate future, in 2018 destocking is anticipated while
demand is expected to decline by some 191 kt. Cutbacks are Stainless steel scrap is often ignored by those who monitor
expected in the EU and various other countries, but China is raw material markets. Stainless scrap is more complex than
other raw materials and often follows its own trend. Last
likely to increase its consumption again.
year, the global external scrap availability amounted to some
Real ferrochrome demand is expected to increase by 3.6%
10.5 Mt, corresponding to approximately 85 kt of contained
to just over 12 Mt in 2018, while apparent consumption could
nickel units and some 180 kt of chromium units. In the case
rise by 4.4% to 12.3 Mt. A ferrochrome production of 12.5 Mt
of China, stainless steel scrap played a role in the early
corresponds to a capacity utilization ratio of 74%, and leads
2000s, but this was before a domestic scrap market could be
to a minor supply surplus of 216 kt. However, if the supply is
developed. China jumped onto NPI, which took over a similar
compared with ‘real’ demand, the surplus would be as high
role as scrap in Western countries. Frequent discussions with
as 489 kt.
Chinese market participants provided a repeated answer: ‘We
 ! do not understand the scrap market’. But for how long?
For more than three decades our analysts have reviewed the
global production costs on an ex-works basis. It appears that
the most favourable conversion costs are identified for
Kazakhstan, which has for years been the most competitive
supplier. Kazakhstan is followed by South Africa’s Glencore-
Merafe joint venture, while Finland’s Outokumpu Group
ranks third. These three ferrochrome producers accounted for
approximately half of the global production last year.
China’s ferrochrome smelters are often not competitive
and are relatively small by international standards. Typically,
they rank 13th and 20th in this comparison. We presently
estimate 2017 average ‘C3 cost’ (in US cents) at 66.7 US
cents per pound Cr content and we expect a marginal increase
to 66.8 US cents per pound Cr for 2018.
A direct 2017 cost comparison between South Africa and
China reveals the following conclusions:
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932.:1..9386

)80179:**%
39762.:53286.955:5399.:5-72,:-4651+,3846:'&&'&*!

Countries within the EU form the largest stainless scrap #46-.158465

market. The scrap market is highly organized and well
The market overview can be summarized as follows.
developed, although Asia – in particular South Korea and
Taiwan – followed the European expertise, whereas Japan 1. Ni-containing batteries might challenge the growing
went its own way, developing sophisticated sampling and nickel requirements for stainless steel. Recycling of
sorting techniques. The USA has been the nucleus of the spent batteries becomes an issue.
modern scrap industry and is still a major source of scrap 2. Chrome markets are dominated by South Africa, but
supplies. As already stated, China lags behind this trend in more chrome units are converted in China – how long
scrap supplies. In part, this lag reflects the long life-cycle of will this remain so?
stainless steel products. Chinese consumption of consumer 3. China’s ferrochrome production has lost its
goods only started to accelerate during the last 20 years. As competitive advantage in terms of production costs.
such, in the future more scrap will be available in China. This Should China reduce production or even possibly exit
should lead to a convergence in regional consumption of from chrome conversion?
stainless steel scrap, with China’s scrap utilization ratio 4. How long until China’s scrap market begins to mimic
creeping up towards the levels seen in Europe. those of the rest of the world? When scrap ratios
In traditional industrialized countries, prices for stainless increase because of the increased maturity of the
steel scrap follow primary nickel prices. The so-called market, ferrochrome consumption from primary
intrinsic value of important elements such as nickel and sources will undergo a drastic change.
chrome is evaluated and these are typically traded at
changing discounts below the primary price. Unfortunately, <9"9796-95
the number of competent scrap traders is diminishing, and
ROSKILL PARISER STAINLESS STEEL. 2018. Stainless Steel & Alloys Weekly.
for this reason it is more and more difficult to obtain
https://roskill.com/market-report/stainless-steel-alloys-weekly/
consistent price information.
ROSKILL. 2018. Nickel: Global Industry, Markets & Outlook, 14th Edition.
The same reasons apply for the evaluation of chrome https://roskill.com/market-report/nickel/
units contained in stainless steel scrap. However, the ROSKILL. 2018. Nickel Sulphate: Global Industry, Markets & Outlook, 1st
available information is more consistent and transparent. The Edition. https://roskill.com/market-report/nickel-sulphate/
evaluation of chrome in stainless steel scrap is relatively ROSKILL. 2018. Chromium: Global Industry, Markets & Outlook, 14th Edition.
stable at about 20% of the charge chrome price. https://roskill.com/market-report/chromium/ 


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