Global stainless steel output grows as demand falters

Growing stainless steel supply is likely to exert downward pressure on prices as demand for material continued to decline during MEPS’s July research period.

Data published by worldsteel this month showed that stainless steel melt shop production had risen by 5.5% year-on-year, to 14.59 million tonnes, in the first three months of 2024. It follows the stainless steel industry body’s earlier prediction that consumption would rise by 3.9% during 2024 in a forecast heavily underpinned by an expectation of 5.7% growth in China. No other region assessed exceeded a 1.4% (for Euro/Africa) growth forecast. 

• This content first appeared in the July edition of MEPS's Stainless Steel Review. The publication features steel prices, indices, market commentary and forecasts from major steel markets in Europe, North America and Asia. Contact MEPS for details of how to subscribe.

Chinese stainless steel melt shop production rose by 2.2% year-on-year, to 8.6 million tonnes, during the first three months of this year. The increase follows a 12.6% year-on-year rise in production during 2023, to 36 million tonnes, according to data published by the Stainless Steel Council of the China Iron and Steel Association. China exported an estimated 4.14 million tonnes of stainless steel last year. 

Stainless steel production ramps-up in Asia 

The growing influence of production in Indonesia, during quarter one of this year, was evident in the ‘Others’ category assessed by worldsteel. Forecasts suggest that the country's output could rise by 20% this year. Melt shop production rose by 25%, to 2.08m tonnes, in the category which includes Brazil, Indonesia, Russia, South Africa and South Korea. This was the largest growth of any category assessed. 

A further category covering Asia, but excluding the influence of China and South Korea, showed that melt shop production had risen by 12.9% year-on-year, to 1.84m tonnes during the quarter. 

As subdued demand persists, such production growth will place downward pressure on Asia stainless steel prices. It will also increase producers’ desire to export material to markets where higher selling prices can be achieved. 

Shipping costs may undermine these ambitions, however. The Drewry World Container composite index increased by 1% to USD5,937 per 40-foot container in the week to July 18 – up 286% year-on-year. 

Subdued demand in Europe and the United States will apply negative pressure to Asian producers’ stainless steel prices. In July, MEPS respondents stated that the previously stable United States market appears to be slowing. The summer months will bring a further slowdown due to holidays and the associated seasonal shutdowns. 

According to worldsteel’s melt shop production data, US mills’ melt shop output was also up in quarter one. Volumes grew by 6.5% year-on-year to 509,000 tonnes. 

Europe alone registers year-on-year decline 

Europe was the only region, of the five monitored by worldsteel, to register a reduction in melt shop production, in year-on-year terms, during the period. The output of European mills fell by 4.8% to 1.56m tonnes. 

The influence of the 136-day strike by unionised workers at Acerinox’s Cádiz plant, and that of Finland’s political strikes on Outokumpu’s operations, contributed to this. 

As MEPS reported last month, Acerinox Europa’s stainless steel division suffered a 15% decline in melt shop production (to 440,000 tonnes) as a consequence of strike action. MEPS research partners say that supply from Outokumpu has quickly recovered from its 12% decline in quarter one deliveries, however. Delivery lead times are now short, following earlier reports that delays had extended to as much as two months. 

European stainless steel prices are already coming under downward pressure following the end of the issues suffered by Acerinox and Outokumpu. Until the low demand that persists across various markets begins to ease, the effect of any uptick in supply is likely to be increasingly pronounced.