Sorry for the delayed response, been away for the last few days.

For our inventory requirements, we are still stocking only as much stainless as we require for immediate use. As stainless steel surcharges lag behind the LME prices by two months, we know that our September and October stainless prices will be lower than they are now and are stocking accordingly. Our decision on inventory levels for the fall and in to the winter will be based on LME performance during Sept/Oct.

As far as drops in stainless steel prices are concerned, we shall see what effect they will have on s/s product demand going in to this fall, but the sharp rise in iron ore prices have somewhat offset the drop in nickel prices. Further, nickel is still "high" at $9/lb. Compared to a year ago, they are certainly lower, but compared to the longer term average, $9 is still pretty expensive.

There has definitely been some permanent damage done from the spike in s/s prices, as some of our customers have moved away from stainless and in to aluminum and plastic. Given the expense of this transition, the R&D required, etc, they are unlikely now to move back to stainless steel unless the price drops quite a bit further. We are working with more aluminum than ever before.

With the additional production coming online and the continued low demand, I don't suspect we'll see much, if any, LME inventory impact from the Falcondo shut down. We will need a string of mine closures to have any meaningful impact.

I have read some recent reports that efficiencies with pig iron production has dropped the cost down to $7-$8/lb. With nickel back up around $9, I suspect many pig iron furnaces are still operating. Hard to get data out of China, though.