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|General Review Of Stainless Steel In 2008 And Its Outlook For New Year (1)|
|= The Production In 2009 Will Have Large Decline After Interval 20 Years, Its Prospect Is Unable To Foresee|
The falsehood, having increased the world production of stainless steel to a remarkable extent in reliance on an expansion of the production in China for the last 2 - 3 years, has collapsed in 2008. This signal has been already exhibited strongly in the western market from 2007 but China had still existed as the traction and, therefore, the optimism to grow stainless steel production by 5% per annum had prevailed.|
The China itself has stumbled. The output of crude stainless steel in China for 2008 is estimated at 7.10 - 7.30 million tons, having decreased by 1.00 million tons compared with that initially planned. The world output of crude stainless steel in 2008 is also anticipated to come to 26.60 million tons as decreased by 7% from that in the preceding year of 2007. This considerable decline of the world production in 2008 was influenced by the fact that stainless steel mills in Europe, the USA and Asia implemented to reduce their production by 30 - 40% in October - December quarter of 2008.
The rotation of economy had recycled in the past years as a pattern and, accordingly, the stainless steel industry believed that the case to decrease stainless steel production for successive 2 years is unlikely to come up. However, this anxiety has emerged with the reality.
The cutback of stainless steel production started from May - June of 2008 in Europe and the USA and this tide has immediately swept over Asian region. Therefore, a circle to decrease stainless steel production has enlarged to South Korea, Japan and Taiwan. However, A recovery of stainless steel production was once expected to come up in autumn and, although stainless steel production was reduced by 5 - 10%, an atmosphere to warm up the market was still left but the circumstances have suddenly changed drastically. Owing to the Leihman stock arisen on the 15th of September, a crisis of financial market and a recession of the world economy have successively occurred and, consequently, a depression of stainless steel market has become definitive.
As mentioned above, a slowness to expand stainless steel production has reminded to have already come up to the surface from the second half of 2007. The output of stainless steel in 2007 was <> USA : decreased by 7.8%, <>Europe : decreased by 10%, <> Taiwan : decreased by 36% (for having shifted part of production to China), <> South Korea : remained unchanged and <> Japan : according to the statistics, increased but decreased in its reality. The world production of stainless steel has already depended on a growth of the production in China.
Consequently, the world output of crude stainless steel in 2007 recorded 28.58 million tons as a peak and the output in 2008 is anticipated to decreased by 7% from that in 2007. Also, the quantity of crude stainless steel to be produced in the world for 2009 has a strong probability to decline further (supposedly to decrease by 8% from that in 2007). The problems at stainless steel mills in 2009 are <> an appraisal loss of stocked raw materials - nickel and chrome caused by a steep fall of these prices, (2) in anticipation of lower prices of nickel and chrome for the near future, end consumers hold back to purchase stainless steel products, resulting in a decline of the actual demand for stainless steel products, and (3) because of a sharp fall of prices for nickel and chrome, an effect of reverse surcharge is thought to come up to the surface and a fall of prices for stainless steel products will progress.
This ripple is still in tunnel and its exit is not foreseeable. The steeply risen prices of nickel and chrome once surged the apparent demand for stainless steel but, owing to the substantial overcapacity to produce these two metals, prices of nickel and chrome have fallen. Particularly, the present extent to reduce nickel production is not enough against the estimated demand for nickel. If this aspect goes on, marginal producers are thought to withdraw from nickel production. The consumption of ferro-nickel has been restricted to the stainless steel industry and, accordingly, ferro-nickel producers have less power to be competitive with nickel metal producers. Therefore, a possibility to determine its competitiveness mainly in ferro-nickel producers will arise in 2009. A nickel smelter in Dominica has already suspended to produce ferro-nickel from October of 2008 for an indefinite period with the reason to implement maintenance.
However, the matter of nickel has been still carried over to 2009. A ferro-chrome producer has already entered into the structure to decrease their production by 40 - 50% from October of 2008 and is endeavoring to make a balance on supply and demand of ferro-chrome in anticipation of the case to skip ferro-chrome contracts for January - March quarter of 2009. However, the measure to reduce nickel production has just started. The background is that many new nickel projects have already existed and a pressure from these projects on the market is not negligible. Therefore, the parties concerned have taken the offensive to sell nickel to LME. The quantity of nickel to be reduced in the world is estimated to be only 100,000 - 200,00 tons on an annualized base and, in view of oversupply of nickel, many of analysts assume that LME nickel price in 2009 will move on a level of US$5 - 6 per lb., approaching the price (US$6.27 per lb.) in 2004. (To be continued)
|last modified : Thu 22 Jan, 2009 [10:14]|