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Western World Stainless Steel Production To Be 3 Percent Lower This Year
November 2005
Global stainless crude steel production is expected to reach 25 million tonnes this year and forecast at 26 million tonnes in 2006. Expansion in 2005 is expected only in China and India. Decreases are anticipated in most industrialised nations.
Production is predicted to decline in the European Union by 450,000 tonnes this year as the mills cut back output in an effort to prop up prices. A modest rise to 8.65 million tonnes is forecast for 2006 as inventories reduce and consumption picks up once again.
The situation in Japan mirrors that in the EU - with a 100,000 tonne projected fall in 2005 followed by a pick up next year as the supply and demand become more in balance. The picture in South Korea is very similar. Output will be lower in 2005 as oversupply affects the market and producers cut production. In 2006, a modest revival is anticipated as inventories and consumption return nearer equilibrium. The curbs to supply in the second half of this year should assist this difficult market condition in Taiwan.
In the US, demand held up reasonably well for most of this year. The market in the final quarter is weakening but should not be sufficient to push output in 2005 significantly below the previous year's outturn. A small improvement is expected next year.
No growth in output is anticipated in the "others" category in 2005. Firm local demand should push up Indian production. No gains are expected in Brazil or Canada due to poor domestic consumption. Weak exports will stifle supply by the South African mill.
It is estimated that Western World stainless production this year will be 650,000 tonnes (3 percent) below the outturn in 2004 - which was not sustainable given real market demand in most countries. A 3.5 percent increase is forecast for 2006 as oversupply reduces.
Chinese production is expected to expand by more than 1 million tonnes in 2005 as new capacity comes on stream and recently installed units move up to realistic utilisation rates. Russian supply will be lower. Chinese output growth is likely to slow in 2006.
Source: MEPS - Stainless Steel Review
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