WESTERN
WORLD STAINLESS STEEL PRODUCTION TO BE 3 PERCENT LOWER THIS YEAR
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.
We estimate 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.
