The Beginning of a Global 'Commodity Supercycle'

Recently, there has been a surge in the price of many commodities, prompting a number of major financial institutions to declare the beginning of a new 'commodity supercycle'. The term 'supercycle' is used to refer to a period of large price fluctu­ations, where commodity prices rise well above their long-term price trends for an extended period of time which can be as long as ten years.

The rising price of several commodities will have a direct impact on the price of stainless steel materials.

Iron

Generally regarded as a lower-price commodity, the price of iron ore is currently at a compa­ratively high level. Though iron ore prices do not have as large an effect on the cost of stainless steel as the molybdenum and nickel used in various grades, the fact is that 70% of stainless steel is made from iron: this results in a larger effect on the cost of ferritic stainless steel grades like 409, 430 and 441, all of which are lower in nickel content than common grades like 316.

Nickel

Traditi­onally, the primary market for nickel has been the stainless steel manuf­ac­turing industry. This is changing due to increasing competition for the commodity from the growing market for green economy batteries. The results of studies by The Nickel Institute show that 39% of Li-ion batteries currently contain nickel but this figure is expected to rise sharply to 58% by 2025.

Vanadium

Vanadium is used to fabricate martensitic stainless steels which, though not as commonly known as the ferritic and austenitic steels widely used for fabri­cations, are crucial to various industries. Designed to provide excep­ti­onally high strength and hardness, they are especially important in the manufacture of products like scissors, knives, razor blades and various pieces of surgical equipment.

As with nickel, there is increasing demand for vanadium from the green energy industry. Vanadium is an important component in the manufacture of redox flow batteries, which are used for grid energy storage and offer better performance than comparable batteries made using lithium and nickel.