Industry insiders in stainless steel industry have been both pleased and worried toward the termination of 2005. Something pleased them is that stainless steel price has stopped dropping and become stable recently (enjoying some rising signs); and the unpleasant thing is that the dropping extent (take 304/2B for example) in 2005 has reached 10000 Yuan/ton, which has brought much profit loss to both the manufacturers and distributors, then will the profit loss be made up in 2006? Whether stainless steel market will keep stagnant as in 2005 or rebound in 2006 is uncertain.
However, we can conclude something from the general industrial chain in stainless steel market for 2005.
Firstly, we can research on the production situation in global stainless steel market.
Since the 21st century, stainless steel output has increased at the growth rate of 6%. Based on the statistics from CRU, stainless crude steel output has gone up from 18.5 million tons in 2001 to 24.6 million tons in 2004, and the production proportion in Asia has increased from 43.9% to 48.4%, with production reaching 11.896 million tons.
While it is predicted that stainless steel output for 2005 will go up by 1.8% to 25 million tons against that of 2004, and the slow growth rate in 2005 has been caused by the rising price of raw material such as nickel & ferrochrome as well as the output cut among the large stainless steel manufacturers in the global range.
1. Production situation in global market.
Stainless steel output has increased only in China and India, and that in most of the developed countries will slide down.
Starting from 3Q. 05, many large stainless steel enterprises in China such as ThyssenKrupp, Posco in South Korea & Yusco in Taiwan, NISSHIN Steel & NIPPON Steel in Japan have all declared to cut their production.
The record on the production reduction among stainless steel enterprises during 3Q.05 (Unit: 10 thousand tons)
ThyssenKrupp and Arcelor will continue cutting their production in 4Q.05 after the output reduction in 3Q. and the production reducing rate of Arcelor has been 20%. In addition, Outokumpu Group has closed its stainless steel plant in Sheffield (An English city), which has cut CR productivity in Europe by 300 thousand tons, meanwhile Outokumpu Group will also reduce its HR productivity of its branch company in Sweden to 450 thousand tons.
As for Japan, it is reported that HR stainless steel output has reached 3.236 million tons in 2005, down 5.8% year on year (that of 2004 has been 3.434 million tons). For detail, long products output has gone up by 6.5% year on year, and that of flat products has decreased by 9.4% year on year.
Stainless steel demand in Japan domestic market has dropped by 1.6% month on month in 2005, and the export quantity has declined by 13.8%; meanwhile long products export has increased by 13.1% year on year, while flat products export has decreased by 22.2%.
In addition, stainless steel output in Japan has dropped to 3.097 million tons in 2002, and that of 2003 & 2004 has increased to 3.33 million tons & 3.434 million tons respectively, while that of 2005 has decreased to 3.236 million tons.
Generally speaking, stainless steel output in American area would decrease by 2.5% against that of 2004, meanwhile that in Europe & Africa would drop by 4.5%, and that in Middle Europe & East Europe will be cut by 23.1% due to the production reduction in Russia.
Stainless crude steel output in 4Q. of 2003-2005 (unit: thousand tons)
2. Production situation in China domestic market
Based on the general statistics data, the large scaled stainless steel manufacturers have produced 1.372 million tons of stainless steel in 2005, up 252 thousand tons against that of 2004, meanwhile HR output has totaled 1.02 million tons, up 485 thousand tons against that of 2004.
Details can be observed from the following table:
CR output unit: (10 thousand tons)
Qingdao Posco and Guangzhou Lisco have just started operation.
HR output (unit: 10 thousand tons)
Stainless crude steel output (unit: 10 thousand tons)
Seeing from the above statistics data, we can see that although the productivity of large scaled steelmakers has increased with large extent, they have not been released comprehensively, and their output growth rate has been limited. Esp. CR output has only increased by 252 thousand tons, meanwhile Shanxi Taiyuan Stainless Steel & Ningbo Baoxin etc. have cut their production obviously in 4Q.05, and ZPSS has cut its production obviously in 2Q.05, thus stainless steel output has decreased by 23 thousand tons in 2005 against that of 2004.
In addition, stainless crude steel output in China has reached 2.8 million tons during 2004, and that for 2005 has gone up by 33.9% to 3.75 million tons. Among the total output, the proportion of stainless crude steel output by Taiyuan Stainless Steel & Baoxin Stainless Steel has gone up from 33.2% to 42.7%, up 9.5%, symbolizing that large scaled steelmakers have become more and more important in China, while the growth rate has been slow.
3. The export situation of flat products in China
Import volume (unit: 10 thousand tons)
Export volume (unit: 10 thousand tons)
We can observe from the above table that Stainless steel CR&HR products import has both increased by 17%, up to end Oct.05, stainless steel flat products import in China has reached 2.3 million tons, locating at high level.
As for export, CR export has increased by 61.3%, while HR export has decreased by 32.3%, up to end Oct.05, stainless steel flat products export has only reached 172 thousand tons, which is negligible compared with the import volume.
Above all, the growth rate of stainless steel output for 2005 has slowed down, and large stainless steel enterprises have cut their production one after another, the increment of China stainless steel manufacturers has been limited (far more lower than the expectation), while stainless steel import has kept high growth rate. Although CR products export has gone up obviously, that of HR products export has decreased, and export volume has been low in general.