Excess Stainless Steel Prompts China to Dump Steel to International Mark

In response to the dramatic slowdown in the demand for stainless steel in China's construction industry, China's biggest steel producers started exporting steel to the international market in humongous proportions. Just last September, Metal Miner recorded a Chinese steel export of 8.52 million tons, an increase of 73 percent from the same time a year earlier.

According to The Telegraph, Platts' China Steel Sentiment Index dropped 12.47 points month-on-month, getting 25.61 out of a possible 100 points in November. This contraction in sentiment is the lowest level recorded since Platts started tracking the market in May 2013.

China's move has a potential to devastate both the US and European mills. According to Macquarie, the first three quarters of the year saw Chinese stainless steel exports to Europe surge by 115.4pc to 522,000 tons. Macquarie also said in The Telegraph that China's cold-rolled stainless sheet metal, which is used for the European car industry, has climbed to 35pc this year, compared to last year's 10pc.

The US responded by imposing duties on the imports of carbon and alloy steel wire from China. Hence, Chinese steel wire exporters can face anti-dumping tax of as much as 110.25pc.

On the other hand, The Telegraph said that China retaliated by warning US authorities to let go of protectionist policies and abide by their country's global commitment to maintain free trade.

In the recent Bureau of International Recycling Stainless Steel and Special Alloys Committee's plenary session in Paris, Asia is said to be the producer of 70% of the world's stainless steel, with China responsibly for almost 50% of it, according to Waste Management World. In spite of Indonesia's ban on the export of nickel ore, a key ingredient used in the production of stainless steel, China's ore stocks lasted significantly longer than anticipated due to the Philippines' filling the gap with lower grade ore. In fact, Chinese steel producers are largely benefiting from the deep slump in the cost of raw materials like iron and nickel ore.

However, analysts predict that Indonesian export ban will finally make itself felt as the exports from the Philippines are slowing down. Nicholas Snowdon from Standard Chartered told the Business Recorder that he expects nickel to be bullish next year, with an average price of $23,400.

Developments on various nickel mining projects might also take its toll on the future price of Nickel and stainless steel. For instance, Australia's Blackham Resources  is investigating potential partnerships for its Wiluna Nickel Sulphide Project that contains a nickel-prospective ultramafic package of 40 kilometers.

Likewise, Amur Minerals Corporation from Russia has a promising Kun-Manie Project, which is regarded as one of the 20 largest nickel sulphide deposits in the world. According to MineSite.com, it contains more than 800,000 tons of nickel. Its limits have not yet been discovered, so there is a potential for larger nickel mineralization.

Amur Minerals also recently received the Ministry of Economic Development's approval for its license application. The company currently trades at 5.75 as of Monday's closing.