Stainless steel prices have fared relatively well over the past couple of months in the face of the threat from the Covid-19 pandemic.

In grade-304 material, the most common grade of stainless steel, prices were down by about 5-7% since the turn of the year – not bad, when compared with the falls in prices of other assets so far this year.

That said, the price falls were likely to continue into May, particularly in Europe and the United States, where stainless steel prices lag the movements in raw material prices.

Even in Asia, however, prices were likely to remain under some pressure given the excess of material available in the region.

As we detail in our Asia analysis this month, continued high production in China is likely to see regional markets there remain under pressure.

But beyond May, prices may rebound. Over the past couple of weeks, prices of both chrome and nickel have increased markedly, by more than 10% since late March in both cases. Stainless steelmakers will inevitably look to pass these costs on to consumers and indeed, in Europe and the US, they do so automatically via the alloy surcharge mechanism.

Nevertheless, producers there may find themselves having to reduce base prices at the same time, and thus take a hit to their margins.

Consumption has been hit severely since the Covid-19 outbreak began, with lead times slipping sharply in each of the regional markets that we track. While prices may quickly rebound over the coming weeks, we do not expect a similar trend to be evident in consumption patterns.

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