The year ended at 1.035 billion MT. Steel production in China rose 23% vs. 2003, as Chinese production surpassed 25% of total world production in spite of reported government efforts to slow down investment.

While real steel usage has been growing, the escalating costs and selling prices in 2004 led to significant inventory building in the second half of last year, as customers tried to hedge against further increases. While raw material and energy costs continue to rise for steel producers everywhere, supply constraints have eased for steel-using industries worldwide and steel ordering has also declined. As a result, prices for certain steel products had declined for six straight months from their September/October 2004 peaks.

Stainless Forecast

Considering a continued growth of demand and some de-stocking, the production growth rate in 2005 will be slightly below the long-term average of stainless steel market growth. The 2005 forecast of 25.8 mmt of stainless steel production is 100,000 tons lower than previously forecast by ISSF. For 2006 ISSF considers that the growth rate will be a bit above 6%.

Actual global stainless steel production increased by 7.5%, to 24.6 mmt in 2004. This was a higher than expected increase and was caused by the very high growth rate (+9.3%) in the last quarter of 2004. ISSF believes that the unexpectedly high growth rate was caused by a ramp-up of new capacity.

Asia is by far the largest stainless steel producing area in the world. Production in the region grew by almost 12% during 2004. ISSF expects further growth of 7.6% (to 12.8 mmt) during 2005. In 2004, all Asian countries contributed to the growth. In 2005, China will expand its stainless melting activities with significant new capacities coming on-stream. The apparent aim is to make the world's largest stainless steel market self-sufficient.

The second largest stainless producing area is Western Europe/Africa. The region was hit by production losses in the first quarter of last year due to strikes and bad weather conditions. In 2004, Western Europe/Africa increased its stainless crude steel production by 4% to 9.4 mmt. For 2005, ISSF expects a relatively flat growth of 2.5% to 9.7 mmt, just compensating for the losses in the first quarter of 2004.

ISSF also expects stable stainless steel production in the Americas during 2005. Production is expected to increase by 2.4% to 3 mmt. In 2004, stainless crude steel production in the Americas increased by 3.5% to 2.9 mmt, in spite of the closure of some Canadian capacity.