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Home > MEPS Steel News - 28.02.2013

STAINLESS STEEL SECTOR RATIONALISATION IS INEVITABLE - MEPS

The merger between Outokumpu and Inoxum - the stainless steel producing arm of ThyssenKrupp - together with the associated divestments and planned plant closures, highlights the role that industry consolidation may have to play in the rebalancing of supply and demand in stainless steel. Especially in the traditional stainless steel producing nations of the developed world, the growing overcapacity relative to demand has been apparent for some years. This has been exacerbated in the last decade by the rapid increase in production capability in the Far East. China's growth in steelmaking capacity, in particular, has outstripped even its own prodigiously increasing consumption, to the point where it needs to be a net exporter.

The plans for the new Outokumpu group include the closure, in the medium term, of the former ThyssenKrupp plants at Bochum and Krefeld. Furthermore, in order to meet EU competition criteria, the company must sell the Acciai Speciali Terni (AST) unit in Italy. There has been conjecture that the Italian producer may operate independently or be acquired by an Asian buyer. However, it has become apparent in recent weeks that Aperam, Europe's second largest stainless steel producer, is interested in having a stake in AST. Local supply chain participants believe such a development would be beneficial for the European market, as it would provide a better balance of power between the major regional players.

In the United States, potential output will be increased by the ramping-up of production at Outokumpu's, formerly ThyssenKrupp-owned, new facility in Calvert, Alabama. Investment by other domestic producers, notably ATI, will introduce further capacity into an already oversupplied stainless steel market. These developments are likely to precipitate the decommissioning of some older units.

The consolidation and restructuring now underway should help stainless steel producers in the West to face the future challenges to the industry, as they concentrate their operations on newer and more efficient facilities.

Source: MEPS -
Stainless Steel Review

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