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 -
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