Outlook of stainless steel market for 2006

1)   Market demand for stainless steel will go up continuously (approaching 6 million tons), while the growth rate will decrease slightly.
Per capita stainless steel consumption in 2005 will exceed 4kg, keeping at the average level in the world, and the growth rate of global stainless steel consumption will be valuable for our reference, stainless steel consumption rate in China has generally kept the same as or a little higher than the average level (7-10%).

Based on the periodical change in global stainless steel industry since 1990, stainless steel consumption in 2006 will be stagnant affected by the slowing down development rate of China economy.

2)   Stainless steel productivity will expand in China domestic market.
The second periodical project of Baosteel Stainless Steel Branch has started operation, and they will realize batches of production in 2006. it is predicted that the productivity of the 1st & 2nd grade projects will reach 1 million tons, up 300 thousand tons against that of 2005.

HR projects and steelmaking projects in Taiyuan Steel & ZPSS will be finished in 3Q.06, and they can realize batches of production since 4Q.05. It is predicted that stainless steel productivity may go up by 2.5 million tons in 2006.

Jiuquan Steelís steelmaking project has started the trial run, and if it realizes 1/3 of the total productivity, it can increase 150 thousand tons of productivity in 2006.

The productivity of a batch of medium stainless steelmaking or HR enterprises starting operation one after another since 2004 has exceeded 1 million tons, and it is possible for them to increase another 300 thousand tons of productivity in 2006.

Based on the primary prediction, stainless crude steel & HR output will go up by 1 million tons in 2006 compared with that of 2005.

About 1.5 million tons of HR productivity has been released gradually in 2005, realizing 200 thousand tons of output, and it is predicted that the output may increase by another 400 thousand tons in 2006.

In 2006, Jiuquan Steel & Tianjin Pipe Steel will put two CR mills into operation, increasing 400 thousand tons of productivity, and it is predicted that newly added output may reach 100 thousand tons.

Based on the primary prediction, CR production in China may rise by 500 thousand tons in 2006.

3)   Trying to cut the import and increase export has been the major task for China stainless steel manufacturers.
Steelmaking & HR products output will go up by 1 million tons in 2006, while market demand can only increase by 500 thousand tons. CR products output may rise by 500 thousand tons, while the market demand can only increase by 300 thousand tons.

In order to keep the balanced supply & demand in China domestic market, domestic manufacturers and distributors have been coordinating to cut the import as well as to raise the export. This is profitable for the general stainless steel industry.

Firstly, the traditional importers should change toward China domestic manufacturers, meanwhile the manufacturers should also try to satisfy the demand of the consumers in consideration of the products volume, quality and specs.

Secondly, manufacturers and distributors should combine with each other to keep stainless steel price at low level. On the one hand, this will attract the downstream users and importers to procure from China domestic market, on the other hand, it is good for increasing export.

Thirdly, strengthening the construction of pre-alarm system so as to resist the anti-dumping policies of foreign enterprises.

All in all, if we cannot reduce import and increase export effectively, serious surplus supply situation may appear in China, which may worsen stainless steel market situation in China.

China CR stainless steel market has suffered this problem in 2005, and this mistake should be avoided in 2006.

4)   Preview of stainless steel market price in China for 2006
Minimizing stainless steel price in China has not only been the request from reducing import & increasing export, but also been affected by the low manufacturing cost.

5)   Conclusion:
We should cherish the opportunity to modify stainless steel structure, stick to the scientific development idea, follow the course the new industrialization road and carry out the new steel industry development policy. Put forward and abide by the accessory policies, control the blind investment in stainless steel industry, prohibit the repeated construction at low level and wash out the inferior stainless steel.

Production, circulation & consumption etc. links should notice their common profit and coordinate with each other so as to realize win-win situation. Esp. steel industry on behalf of domestic domain should change from extensive mode to scientific mode as well as try to satisfy the end usersí demand.

Related governmental sections and industries should lay their emphasis on actualizing industrial policy and regulating market order.

Source: SteelHome