MEPS - RECORD GLOBAL STAINLESS STEEL PRODUCTION FORECAST IN 2010

Global crude stainless steel production for 2009 turned out at 24.6 million tonnes, a fall of 5 percent compared with 2008.

Total output for the first quarter of this year is now estimated at almost 7.5 million tonnes. This figure is a remarkable 54.6 percent higher than the outturn for the first three months of last year, which marked the low point of the recent downturn.

The result for period one is significantly up on our previous forecast, notably in the EU and the US. Demand in these markets will have been inflated by buyers placing orders ahead of the foreseeable effects of soaring alloy surcharges. Although there has been some pick up in stainless consuming activities in these regions, such as car and truck manufacturing and energy-related projects, overall end-user demand has not grown in line with the rate of production. This will result in a degree of correction during the second and third trimesters.

However, we have adjusted our forecast for global output in calendar year 2010 up to 28.5 million tonnes, which would exceed the previous record outturn, in 2006, by 0.3 million tonnes. Although first quarter production in the developed markets was higher than predicted three months ago, the full year forecast output for the EU, Japan, US, South Korea and Taiwan combined is 20 percent down on the all-time high, 2006 figure. On the other hand, the 2010 result for China and Russia is expected to be 78 percent greater than four years ago.

Demand remains depressed in Japan. The estimated outturn for the first three months of this year is, consequently, well below the country's maximum capability. The other major stainless steel producing nations in the Far East - China, South Korea and Taiwan, have continued to operate at close to full capacity in recent months. Market conditions in India are also very different from those in the western world and production there continues at near to record levels.

China's output of over 2.4 million tonnes in the January to March period represents its second-best ever result, behind the third trimester of 2009. We have not reduced our forecast for China for the remainder of the year. However, inventories in the distribution system there are now at a very high level.

Period one production in Russia, at 51 thousand tonnes, was 36 percent higher than in the corresponding three months last year but still well below pre-recession performance.

South African consumption has not recovered to anything like peak levels. Nevertheless, first quarter production of 110 thousand tonnes was a massive 69 percent higher than during the January to March period in 2009.

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

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