Slow Growth Seen For Stainless Production

The International Stainless Steel Forum (ISSF) has released a new global forecast for 2005 showing a worldwide increase of 1.8% in stainless crude steel production, totaling 25 million metric tons (mmt).

Factors affecting the slowdown in the growth of the production were discussed at the ISSF Board of Directors meeting in Seoul on Oct. 4. According to ISSF:

  • High stainless prices based on exceptionally high raw materials costs obliged stainless steel fabricators and stockholders to reduce significantly their stocks of stainless steel products in 2005.

  • The stainless steel market was over-supplied in late 2004 and early 2005. These factors have led to a decrease in demand for stainless steel, especially in highly developed economies. As a result, many stainless steel mills around the world have announced production cuts.

    Only Asia has shown growth in stainless steel production in 2005. The forecast for the region has been increased by 0.1 mmt based on the major expansion of stainless steel production in China. It is expected that Asia will account for more than half of the stainless steel produced in the world in 2005.

    All other regions will show a significant drop in stainless steel production. The most affected region is Western Europe/Africa where a decrease of 4.5% is expected.

    ISSF forecasts that production in the Americas will be reduced by 2.5% compared to 2004. Production in the Central and Eastern Europe region will decrease by 23.1% compared to 2004.

    During 2006, ISSF expects underlying demand for stainless steel products to rise by about 5%. However, this may depend on the prices for raw materials. If prices increase further, demand may be affected.

    ISSF expects that stocks of stainless steel will be low by the end of 2005, and thus stainless steel production will increase by around 6% during 2006 to re-fill stocks where necessary.