The growth rate of 8.6% is above the long-term average and includes strong compensation for the production losses that occurred in many countries during 2005. These losses were caused by significant reductions in stainless steel stocks at service centers and fabricators. Actual global stainless steel production decreased by 1.0% to 24.3 mmt in 2005.
In 2005, Asia was the only major area with an increased stainless steel production (+5%). ISSF expects further growth of 10% in Asia during 2006 as new capacities come on-stream. ISSF anticipates that China will become the world's leading stainless steel producer in 2006. In the Asian region in 2005, only China and India showed continued growth. However, in 2006 ISSF expects that stainless steel production in all Asian countries will grow.
The second largest stainless producing area is Western Europe/Africa. This region was hit by production losses in the second half of 2005 when severe cutbacks in demand caused service centers and fabricators to reduce stocks. Production decreased by 6.4% to 8.8 mmt in 2005. ISSF expects a strong recovery in the region during 2006 to compensate for the 2005 production losses. Western European/African stainless crude steel production is expected to rise by 7.1% to 9.5 mmt in 2006.
For the Americas, ISSF expects a strong recovery in stainless steel production in 2006 with an increase of 6.0% to 2.9 mmt. In 2005, production in the Americas decreased by 8.3% to 2.7 mmt.
Central and Eastern Europe will see a recovery to 2004 production levels.
The high raw material prices together with the current high volatility of the nickel price create concerns for substitution. However, for some applications there is a potential for application of low/no-nickel-grades.
Outlook for 2007
After increased growth in the general economy in 2006, ISSF expects a slight flattening in 2007. This should lead to a long-term average increase in stainless steel demand provided the price and supply of alloying materials is secure and reasonable.In general, global stainless crude steel production could rise by more than 5%. Again China will take the lead in growth rates within a growing Asian region. ISSF believes Western Europe will be the second largest stainless steel producing region, followed by The Americas and Central and Eastern Europe.
This forecast was released during ISSF's 10th Annual Conference in Louisville, KY, on May 19.
Stainless prices to rise in short-term
A separate forecast by the British global steel market research company MEPS foresees that rising nickel costs ensure that stainless steel transaction prices will increase over the next couple of months in all parts of the world. Expanding figures for ferrochrome and molybdenum over the same period are also a real prospect.According to MEPS, “We are bullish about stainless steel prices in the period to September, at least. We forecast a further 19% increase in our benchmark 304 cold rolled coil price over the next four months. Over that period, supply is likely to remain quite firm - at least in Western nations.”
MEPS added, “We have reservations about the prospect of this market continuing at the current level in the medium term. Production is starting to rise to meet current orders - a large proportion of which are speculation against rising raw material costs. As the third quarter develops, we expect to see a reduction in the volume of mill orders. This is likely to be followed by lower demand for nickel, chrome and molybdenum and a correction in their selling prices is anticipated in the final trimester or, perhaps, earlier.
“We envisage our world stainless steel prices drifting lower in the last few months of 2006 and into the first half of 2007 at least. The steel mills should have caught up with orders before the end of this year. Production this year is likely to be substantially above the level of real demand. This prediction assumes a decrease in the price of nickel. This is by no means a certainty in these unpredictable times in the metal market,” said a MEPS analyst.
