Stainless steel prices rise on higher nickel demand

Manufacturers are raising the prices of stainless steel because the price of nickel, used in the production process, is increasing sharply.

Global demand for stainless steel is growing on the basis of strong sales of end products.

Some speculative funds have also flowed into nickel trading, industry officials said.

The spot price for nickel on the London Metal Exchange, which is an international benchmark, has risen above $30,000 per ton, compared with less than $6,000 in early 2002.

Last week, Aichi Steel Corp., an affiliate of Toyota Motor Corp. based in Tokai, Aichi Prefecture, announced that it will raise by 15 percent the prices of stainless steel products used in computer chips and chemical plants.

The increase, which will apply from shipments in November, will be the third this year. The three price increases will total about 40 percent.

In August, Daido Steel Co., based in Nagoya, decided to raise by 60,000 yen per ton the prices of stainless steel products used in such areas as industrial machinery and chips.

The prices will be raised from shipments in October. The special steel maker has already raised prices twice this year, but it says that it is unable to absorb rising costs.

The company will also increase by about 10 percent from October the prices of tools used for production of die and molds for automobiles.

In anticipation of further increases of nickel prices, the company has established a study group to consider the introduction of a system that would link product prices to nickel prices.

Demand for stainless steel, which does not rust as easily as steel, is increasing in China, the Middle East, Russia and other places, where corporate investment is increasing for energy facilities and desalination plants, where operators want to prevent corrosion.

Nickel production is not keeping up with demand partly because of strikes and accidents at mines.(IHT/Asahi: September 12,2006)