WORLD STAINLESS STEEL OUTPUT TO FALL BY 20 PERCENT THIS YEAR

MEPS forecasts global stainless steel production at 20.8 million tonnes in 2009. The Western world figure (excluding China and Russia), at 13.5 million tonnes, would be the lowest since 1994 and the third consecutive annual decline in stainless steel output.

First quarter global output is expected to fall to just above 4.6 million tonnes. This will be below the disastrous figure recorded in the previous trimester. However, we do expect a recovery during the second half of the year. Higher prices, as a result of an increase in the cost of nickel, are likely to stimulate inventory building as users and distributors purchase ahead of rising selling values.

Chinese production in 2009 should match the figure recorded in the previous twelve months. Domestic demand is forecast to hold up reasonably well despite quite high inventories through the supply chain.

EU output is expected to reach almost 6 million tonnes this year, despite an extremely poor first quarter. Alloy surcharges are likely to increase - fuelling modest inventory rebuilding as the mills lift transaction values. A similar recovery is anticipated in the United States in the second half. The predicted return for the full year is 1.5 million tonnes and it will be the lowest figure recorded since the last global economic downturn in 1982.

This year, Japanese stainless production is forecast to drop below 2 million tonnes - the first time for thirty one years. The tonnage is based on an improvement in output after a low first quarter. This year's returns in South Korea and Taiwan are likely to decline to figures last reported at the time of the Asian crisis in 1988.

Source: MEPS - Stainless Steel Review - click here for a free sample copy.

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