GLOBAL STAINLESS STEEL OUTPUT TO RISE 14 PERCENT IN 2006

The world's stainless steel sector will record an unprecedented jump in crude production this year. We expect total output in 2006 to climb to 27.8 million tonnes - 3.4 million tonnes above the outturn in the previous twelve months.

Such a rate of increase is unsustainable. The long term growth in production has been around 5 percent per annum. This year, the figure will be nearer 14 percent.

A substantial rise in output will be recorded in the EU this year. The gain will be almost 12 percent. A significant increase was expected after the decline in 2005 but not a double digit percentage gain.

A noteworthy production rise will also be reported for the United States this year - expanding to an estimated 2.55 million tonnes from 2.2 million tonnes twelve months earlier. New capacity pushed the growth to above 15 percent.

It is in Asia, however, that we see the biggest jump. A momentous expansion in crude steel output has occurred this year in China. It is now expected that the full 2006 outturn will top 5 million tonnes - making it the largest producing country in the world. Moreover, the steelmakers are running below their rated capacity. Furthermore, additional plants are due to come on stream over the next few months.

The massive rise in Chinese stainless steelmaking has stifled any serious output rises in the other main Asian producing nations. No significant gains are anticipated in South Korea and Taiwan this year. Japan will record a modest improvement of around 2.7 percent in strong market conditions.

Clearly, with production of stainless steel rising at such a pace the demand for nickel has been at extraordinary levels. Nickel prices have jumped to record highs. In the US and EU, alloy surcharges apply. Customers can forecast the level of extra cost to be imposed on future sales and have often bought steel in advance.

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

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