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Stainless prices are expected to increase in October as surcharges are likely to rise and a price hike on commodity grades is possible, according to market sources.
Some sources speculated that domestic mills' recent price increase on Type 201, Type 301 and some 400-series stainless could signal a looming hike for more widely bought grades such as Type 304, boosting prices that have been slowly eroding since March.
"Maybe it’s a warning shot that the others are coming," one market source told.
The cash nickel contract on the London Metal Exchange has averaged $7.30 per pound over the surcharge calculation period so far, up 3.4 percent from $7.06 per pound last month, making higher October surcharges likely.
Stainless steel prices fell to their lowest levels this year in September, with distributors now paying around $1.30 per pound for Type 304 cold-rolled sheet, down from $1.32 in August.
But even while most sources said they would welcome a price increase on other stainless grades due to low profit margins at current price levels, there was some doubt about whether a hike is sustainable in what is still a period of soft demand coming out of the traditionally slower summer period.
"I don't know if it would hold at this point," a southern service center executive said.
The recent price increase implemented by all domestic mills in early September did not affect the most widely bought stainless grades, sources said.
"From a distribution standpoint, 304 is probably 60 to 65 percent of the market," a Midwest service center executive said, adding that Type 316, also not included in the hike, accounted for a further 20 percent of demand.