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Global stainless steel output to grow by 4% in 2022

MEPS forecasts that global crude stainless steel production will reach 58.6 million tonnes, this year. The growth is likely to be driven by mills based in China, Indonesia and India. Melting activity in East Asia and the West is expected to remain rangebound.

Chinese stainless steel production rebounded strongly, in the first quarter of 2022. Supply chain participants returned to the market in a buoyant mood, at the conclusion of the Lunar New Year holidays and the Beijing Winter Olympics. Nevertheless, output is forecast to drop in the second quarter. Strict Covid-related lockdown measures, in the key manufacturing hub of Shanghai, forced the closure of many stainless steel-consuming businesses. Demand is weakening, particularly in the automotive sector, where sales fell 31.6 percent in April, year-on-year.

Melting activity in India is estimated to have reached 1.1 million tonnes, in the first three months of this year. However, production in the subsequent two quarters may face negative pressure. A recently announced export duty on several steel products is likely to deter sales to third countries. Domestic steelmakers may cut output, as a result. Furthermore, cheap imports from Indonesia are taking an increased share of the local market. Supply from that country is likely to surge, in 2022.

Major European and US producers are estimated to have lifted their stainless steel shipments, in the January/March period. Nevertheless, supply is unable to keep up with demand, due to strong end-user consumption. Consequently, domestic stockists are increasingly fulfilling their needs with imported cargoes, particularly from Asian suppliers. Volatile raw material and energy costs may restrict production growth in the remainder of 2022.

The deteriorating market outlook, resulting from inflationary pressures, presents substantial downside risks to the forecast. The elevated cost of energy, due, in part, to the war in Ukraine, is likely to limit consumer spending. Furthermore, manufacturing companies continue to face supply chain delays due to Covid-related lockdowns in China.
Source: MEPS International Ltd (https://mepsinternational.com/gb/en/news/global-stainless-steel-output-to-grow-by-4-in-2022)

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