ISSF forecasts year of consolidation for crude stainless production in 2005

2005-05-19

The International Stainless Steel Forum (ISSF) forecasts a year of consolidation in stainless crude steel production in 2005. ISSF expects that global stainless crude steel production will reach 25.8 million metric tons (mmt) in 2005. This represents a rise of 5% on 2004 production. The forecast was released during ISSF-9 in Helsinki, Finland. Considering a continued growth of demand and some destocking, 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 tonnes 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 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. Growth in the Central and Eastern Europe region will also be flat in 2005. ISSF expects production to increase by 2.0% to 350,000 tonnes over the year. ISSF does not expect a drop in the underlying demand from the stainless steel fabricating industry. However, there is a certain risk that stainless steel fabricators may substitute stainless steel with other materials given the current high prices for stainless steel raw materials.