Münster’s review

The theme that has accompanied us throughout the year – the price increases for the material P250GH – is also the focus of our review of December 2017. Last month had no real surprises in this regard.

General price development flanges and raw materials

Everything stayed the same as usual. The all-time high of 4,600 RMB / tonne at the P250GH in November 2017 was already outbid in the first week of December with a further price increase of 2.5%, to reach the new all-time high of RMB 4,800 from the middle of the month. At this price level, the price remains today.

Production in the stainless steel segment rose by 7.4% in the first nine months of 2017 according to the latest figures. In the black sector, production in November saw a further increase in production of 3.2%. These figures are not exactly in line with the protestations to reduce the overcapacities and are therefore somewhat irritating.

Situation in China

The measures that have been in place since mid-November to reduce environmental pollution, which reduce the steelmaking plant’s production capacity or are approaching zero, have become clearly noticeable.

Our partners often offer significantly longer delivery times, as the sourcing of raw materials has become much more difficult. In addition there is a calculation uncertainty regarding the delivery time. Before the shortage, the production facilities for flanges could calculate with an exact procurement time. Currently it is the case that the orders are placed and the exact delivery time is unclear. It can take two weeks between order and delivery, instead of the usual delivery within 48 hours for standard materials.

To make matters worse, not only the steel mills are affected, but occasionally the manufacturers of the flanges themselves, even if they have already switched to the clean energy source of gas. In the past, when electricity was occasionally limited in winter, this now also applies to the availability of gas.

Especially in the Shandong region, the works are particularly affected. In this province, some factories may use only 50% of their regular production time; at the same time production has to be stopped (or gas is missing and at other times there is no electricity).

Forecast or my view into the crystal ball

The all-important question is: what are the next weeks in terms of prices?

Of course, I can not really look to the future, but for the next few weeks, I’m stuck. I assume that the price of the material P250GH will not decrease significantly until the beginning of March. The combination of two circumstances makes a reduction extremely unlikely. On the one hand, the extensive environmental protection measures will continue until 15.03.2018, which will continue to cause shortage. On the other hand, the Chinese New Year and the subsequent national holidays take place in the middle of February, which in the past has always led to an increase in prices – even if only in part. For a reduction of the prices until then speaks under consideration of this explosive combination nothing. Not a single factor could be used for a corresponding assessment.

Connectiing greetings from Bremen – and have a good time!

Claudia Münster