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Engineering Industry Reports and Surveys
News Release from: MEPS (International)
Edited by the Engineeringtalk Editorial
Team on 05 May 2005
Oversupply leads to stainless steel
price cuts
Oversupply continues to characterise many flat rolled stainless steel markets around the world, according to the latest MEPS Stainless Steel Review.
Oversupply continues to characterise many flat rolled stainless steel markets around the world Global output of crude stainless in 2004 was around 7.5% higher than the year earlier figure
This article was originally published on Engineeringtalk on 4 Nov 2005 at 8.00am (UK)
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The increase in supply was so far out of line with consumption that it was followed by the inevitable price weakness.
Taking the largest volume stainless product, cold rolled 304, and excluding alloy surcharge, European prices in period one averaged 3.5% less than in the final trimester 2004.
Prices dropped by roughly Eur 100 per tonne from December levels.
In the USA oversupply has been less apparent because of stronger underlying consumption growth.
The decline in price has been less marked in spite of the increase in production at Acerinox's melt shop.
But in Asia there have been some steep falls.
Cold rolled 304 prices in China are reported to have lost the equivalent of US $300 per tonne since early March.
Oversupply will continue to affect the market for a little while yet.
Additional capacity is entering the scene.
Outokumpu is ramping-up its newly expanded melting shop and cold rolling facilities at the Tornio works in Finland.
The company has acknowledged that the weakness in the European market means it is directing greater volumes of stainless into Asia instead.
European mills are also selling into Russia where local stainless production has been reduced drastically owing to lack of profitability.
Chinese stainless output will rise this year, notably with the startup of new capacity at Baoshan and Taiyuan.
China is increasing its imports of stainless scrap from the USA by 20%.
Global stainless production so far this year is growing more slowly than the unsustainable pace seen in 2004.
In the European Union, output in January-February was about 4% ahead, year on year - a figure that is not excessive given that the comparable period was hit by strikes.
MEPS' projection for world stainless steelmaking in 2005 is a 3.7% increase over last year's 24.4 million tonnes.
Assuming consumption rises at its usual 5-6%, the company can envisage balance being restored before 2006.
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