Stainless steel prices and margins for stainless steel producers have risen notably over the past few months in both Europe and the United States, but there are now signs that the rally is petering out.

A clear reason for the halt to rising prices comes from the near 20% drop in nickel prices seen in late February/early March, which has now been passed on to consumers via the alloy surcharge mechanism.

Yet the rally in base prices and the effective margins enjoyed by producers also appear to have been halted this month.

One reason for this is that prices in Europe and the US have become increasingly decoupled from those in Asia. And even in a global market, which is increasingly burdened by various restrictive trade measures, this decoupling can only go so far. Indeed, as we discuss in our Europe analysis this month, imports are looking increasingly attractive to some consumers - even after the application of various trade duties.

Trade policies in Europe and the US are, therefore, of key importance.

Upcoming rulings in Europe - on imports from India and Indonesia, in particular, and then on the region’s wider trade safeguard measures - will have a key impact on local markets. Stainless steel producers and consumers in this region, as well as those in the US, are increasingly squaring off against each other in lobbying for different outcomes with regards to trade policies.

But the economic and political backdrop in both regions makes it difficult to envisage any major changes to policies and thus, while the gaps between prices in Asia and those elsewhere may not widen much further, they are unlikely to quickly narrow back toward the levels seen only a couple of years ago.

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