London (Platts)--26Nov2012/747 am EST/1247 GMT

European stainless steel surcharges for December are lower, producers announced at the end of last week, as the price for nickel, the main driver for some of the alloy surcharges continued to trade in a weaker range over much of November.

All four major European stainless steel producers -- Acerinox, ThyssenKrupp, Aperam and Outokumpu -- have dropped the alloy surcharge for CR 304 2-mm stainless steel,CR 316 2-mm and CR 430 2-mm grade stainless steel for December production.

The average surcharge price for CR 304 2-mm coil for December is now Eur1,233/mt ($1,597/mt) down Eur122 from an average of Eur1,355/mt for November.

Surcharges for 304 grade stainless steel are down 9% and are now in a range of Eur1,220-1,247/mt.

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Surcharges for CR 316 2-mm coil for December are now averaging Eur1,851/mt down from Eur2,021/mt for November, a drop of 8%.

Surcharges for 316 grade are now in a range of Eur1,822/mt-1,871/mt.

Meanwhile, European surcharges for CR 430 2-mm coil are also lower, down from an average of Eur442/mt for November to an average of Eur433/mt for December.

The surcharge forms a large proportion of the final transaction price for stainless steel. It has dropped recently on the back of lower nickel prices on the London Metal Exchange.

Three-months nickel on the LMEselect fell from a year high of $22,150/mt in February 2012 to a year low of $15,236/mt in August 2012 and has continued to trade in lower range over much of November.

In a research note, Citibank said that the outlook for nickel maybe more positive as the market moves into the first quarter of 2013.

The bank said stainless steel inventories in Europe are currently at historic lows and that a modest demand improvement is expected in the new year as consumers look to restock.

"For 2013, a modest pick-up in stainless demand is expected, principally in the first quarter on restocking, while nickel demand is also expected to benefit from strong demand from Europe's aerospace sector," Citibank said.

The Platts weekly dealer molybdenum oxide assessment currently stands at $10.90-11.10/lb. Platts assessed high carbon 52% ferrochrome at $0.84-$0.86/lb as of Thursday.

Three-months nickel on LMEselect was trading at $16,680/mt at 1040 GMT Monday.

--Greg Smart, greg_smart@platts.com
--Edited by James Leech, james_leech@platts.com

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