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Stainless output to reach new heights in 2002
August 2002
Global stainless crude steel production increased substantially in the April to June period of 2002. The main driver was continued strong demand from China. The significant improvement in output should be maintained for most of the third quarter. However, MEPS International can see grey clouds on the horizon which would lead to reduced steelmaking in the final trimester.
The Chinese government set import quotas amounting to 355,000 tonnes of strip and plate products effective from 24 May for 180 days. This has generated frantic activity from foreign mills trying to gain as much of the tonnage as possible. A 13 percent duty will be applied when the strip quotas have been exhausted. Customs' reports indicate that just over half of the hot rolled sheet and 60 percent of the cold rolled volumes were taken up in the first fifty-four days. Over the same period 43.5 percent of the plate allowance was used. The total quota is expected to be depleted by mid September.
Western World stainless steel production is forecast to reach 18.65 million tonnes in 2002 - up 600,000 tonnes (3.5 percent) on the year earlier figure. Despite the anticipated moderation in the final quarter, this year's outturn is forecast to be the highest ever for the stainless sector.
EU steelmakers were benefitting from the increasing foreign sales opportunities and consumer stockbuilding. Over the first five months, output was up 6 percent on the same period in 2001. Mill order books are reasonably firm. However, an extended reduction in the nickel price could bring on an inventory depletion phase during the final quarter of the year as alloy surcharges decrease.
Japanese shipments have been very strong after an extremely slow start to the year. All of the improvement has come from higher exports to China and other Asian countries. This situation is unlikely to continue into the last trimester.
US stainless production should steadily increase now that the NAS melt shop is in service. However, full capacity is not likely to be reached in the near term but higher production is anticipated.
South Korean and Taiwanese stainless steelmakers have also made gains in output from the Chinese safeguard measures in the short term. This boon will be short lived. Demand in the final three months is likely to be lower.
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