In recent years, steel mills using electric arc furnaces for melting the steel have introduced a graphite electrode surcharge. As this is the default steelmaking process for stainless steel and nickel alloys there was an immediate impact upon pricing. Once considered a basic consumable, the supply of graphite used to make the electrodes tightened from 2017 through 2018. One of the largest producers of the raw material, China, cut production by up to 30% in response to local environmental concerns. In addition, anticipated use in the production of Li-ion batteries for electric vehicles also led to pricing speculation. In order to protect the availability for local steelmakers, China and other large producers such as India imposed export tariffs of 20%. European steel mills reacted by creating an additional surcharge, up to €30/T or €0.03/kg.
However, compared with the impact of graphite electrode surcharges, employee wages, inflation and energy costs, the volatility of key raw materials is far more significant. Of all the materials used within stainless steels and nickel alloys, nickel has continued to have the greatest impact upon short-term pricing.
Historically, nickel has traded from anywhere between $8,000 and $55,000 per tonne. The spike in prices to historic highs in 2006/7 certainly helped to encourage further uptake of super duplex stainless steels. Not only was the cost differential between super duplex stainless steels and nickel alloys much greater at this point, but the volatility month-to-month made estimating prices for projects fraught with risk.
Although prices have been far more stable over the last 10 years, more modest increases over the last few months still have an impact. In June the price of nickel quoted on the London Metal Exchange was $12,000/T, but by August it had surged to $16,000/T.
Market watchers suggest that the fundamentals of the nickel market have not changed particularly and that this recent price surge is linked to market speculation only. However, Indonesia – one of the major producers – has threatened to stop exports from 2022 onwards. This action is mooted to support future requirements for battery production.
For an alloy with a high nickel content of c.60% such as Alloy 718 (Inconel 718, N07718, 2.4668) or Alloy 625 (Inconel 625, N06625, 2.4856), this means a price increase of several pounds sterling per kilogramme. Less rich nickel alloys such as Alloy 825 (Incoloy 825, N08825, 2.4858) where the nickel content is c.40%, price increases are slightly less.
However, for super duplex stainless steels such as Ferralium 255 (F61, 1.4507), SAF2507 (F53, S32750, 1.4410) and SAF32760 (F55, 1.4501) with a modest nickel content of around 5%, price increases can be measured in pennies rather than pounds sterling.
Whilst it is possible to hedge nickel prices to ensure stability over the length of a contract or large project, this process can add costs and reduce the flexibility of the delivery schedule. Therefore, Langley Alloys are seeing our customers follow a number of approaches to limit price increases and the risk of volatility:
a) Explore the potential to switch Alloy 718 for Alloy 925 as it provides similar strength levels but with lower alloy content
b) Review whether super duplex stainless steels can be used instead of nickel alloys. Super duplex grades offer excellent corrosion performance and strength but are somewhat restricted in terms of operating temperature range compared with nickel alloys. Generally speaking, they are not used above 250degC, whereas Incoloy 825 could be used up to 540degC. Similarly, the impact toughness of super duplex grades will fall off at very low temperatures, whereas for nickel alloys any decline is more gradual.
c) Exploit the higher strength of Ferralium 255 compared with other super duplex stainless steels. It achieves a minimum yield strength of >85ksi, compared with >80ksi for S32750 and S32760. As prices increase, this 6-7% benefit becomes even more worthwhile when alloy prices are higher.
Langley Alloys carries an extensive stock of duplex, super duplex and nickel alloys. Not only can we offer competitive prices on a spot-purchase, but can advise on the most effective ways to manage your purchase requirements going forward.