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News

Further growth in stainless steel production is guaranteed this year

MEPS (International) : 29 November, 2004  (New Product)
Global demand for stainless steel grew by about 7 percent in the first three quarters of this year, according to recent estimates from the producers' group, International Stainless Steel Forum.
Global demand for stainless steel grew by about 7 percent in the first three quarters of this year, according to recent estimates from the producers' group, International Stainless Steel Forum. A proportion of this material will have gone into stock. As alloy costs have risen sharply over the course of 2004, end-users and middlemen have built up their inventories to hedge against price rises.

The organisation also forecast world crude stainless production this year at 24,370,000 tonnes, an increase of 6.8 percent on 2003 but will probably fall to 5.9 percent in 2005. These figures may prove to be over optimistic.

Over the last twelve months the MEPS world average price for type 304 cold rolled stainless has gone up from $US1869 per tonne to $US2718 per tonne. Much of this has been absorbed by costs for alloys and scrap, leaving underlying basis prices in most cases only slightly higher. Nevertheless, stainless producers' profits have been improving. This is partly thanks to higher sales volumes and to their ability to pass raw material costs on to users.

The dips in prices for certain stainless products in some parts of the world that we report this month show that producers still need to be mindful of the dangers of over-production. December in particular seems likely to be a weak month for offtake.

The ISSF says that no major crude steel capacity expansions are projected to come on stream in the period up to early 2006 when Arcelor's new 1 million tonne per year melting shop in Belgium will be commissioning. If producers hope this lack of capacity additions will help tighten the market and put a floor under stainless prices, they may be disappointed. If growth in demand is 5 percent in 2005, the extra tonnes needed could be supplied from existing facilities. Recently commissioned plants, such as Outokumpu Tornio and Posco's third melt shop at Pohang, are still ramping up their output. There is spare capacity at Acerinox's US plant and elsewhere. Mills may have to restrain their production to avoid price falls.

Source: MEPS - Stainless Steel Review
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