Posco to Reduce Nickel Use in Stainless Steel Because of Volatile Prices
Posco, the world’s second-biggest maker of stainless steel, is seeking ways to cut its use of nickel because of volatile prices, an executive said.
The company will increasingly focus on so-called 400-series stainless products, which use ferrochrome as a raw material and are used in home appliances and cars, and other products that use less nickel, Suh Young Sea, a senior vice president of the Pohang, South Korea-based mill, said in an interview.
Nickel is the second-best performer on the London Metal Exchange this year, rising 21 percent, driven by rebounding demand from stainless-steel mills, led by China, the biggest producer. The mills are the world’s largest users.
“The high volatility of nickel prices casts too much uncertainty over business management,” Suh, in charge of marketing and strategy for stainless steel, said in Seoul. “The key task for mills is how to get free from the influence of nickel. You will see increasing efforts by mills to reduce impact of nickel prices on stainless steel in various ways.”
Nickel, which surged 58 percent in 2009, rose to as high as $27,595 a ton this year and fell to as low as $16,975 a ton. The metal for delivery in three months dropped 1.7 percent to $22,430 a ton at 12:06 p.m. in Seoul.
The so-called 300-series products, which have nickel as a raw material and are used mostly in buildings, may take up about 57 percent of the global stainless market this year, down from about 70 percent in the past, Suh said. The share of the 400- series products may gain, he said yesterday.
‘Tough Year’
“It was a very tough year,” Suh said. “Demand recovered to some degree this year as you can see from higher operating rates and higher output, but profitability didn’t fully get back on its feet because prices didn’t catch up with nickel gains.”
Output this year may rise to about 1.8 million metric tons from about 1.4 million tons last year, he said. He didn’t give a 2011 forecast. Global production may grow to 32.7 million tons next year, from an estimated 31.2 million tons this year, according to Alloy Metals & Steel Market Research.
Posco ranks as the second-biggest stainless steel mill by 2009 output, coming after China’s Taiyuan Iron & Steel Group Co. and is followed by Taiwan’s Yieh United Steel Corp. and Germany’s ThyssenKrupp AG, according to the website of Chinese researcher Mysteel.com.
To contact the reporter on this story: Sungwoo Park in Seoul at spark47@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net;
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