World production of crude
stainless steel fell last year, but should stage a recovery in 2006,
according to MEPS forecasts. Estimated output in the first quarter
of this year has increased from the low levels of periods three and
four last year, but remains below the comparable period of 2005.
We estimate that crude stainless steel
production in the western world (excluding China and Russia) reached
20.81 million tonnes in 2005. This was a decline of just over 1
million tonnes, or 4.8 percent, in 2004.
The sharpest fall came in the European
Union, where we estimate 2005 production was below 8.25 million
tonnes – about 6.5 percent less than in 2004. Output also declined
in Japan (by 5 percent), the USA (by 8 percent) and South Korea (by
4.6 percent).
But stainless steel production surged ahead
in China in 2005 - reaching 3.2 million tonnes. There was also a
significant rise in India - up 11 percent to 1.5 million tonnes.
This left global output, last year, at an estimated 24.3 million
tonnes – about 300,000 tonnes or 1.2 percent less than in 2004.
Our estimates indicate that stainless steel
production in China continued growing in the first quarter of this
year, and may have been as much as 18 percent higher than in the
first quarter, 2005. But most traditional stainless-producing
regions have seen their output continue to lag last year’s rates.
However, we expect to see production resume
an upward track in most countries during the course of 2006. This
could leave world total at around 26 million tonnes, an increase of
around 7 percent. Western world output would grow more slowly.
Growing production in China will make it
increasingly difficult for mills in other countries to find an
outlet there for their surplus production. Such a development may
put a question mark over the profitability of recent heavy capital
expenditures on new melting capacity by mills in Europe and
elsewhere.
