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Stainless Steel Production Down in 07 Following Collapse of Nickel Prices

04/07/2008 - Global stainless steel production leveled out at 27.6 million tonnes in 2007—a decline of 2.9% compared to 2006—according to preliminary figures released by the International Stainless Steel Forum.

Global stainless steel production leveled out at 27.6 million tonnes in 2007—a decline of 2.9% compared to 2006—according to preliminary figures released by the International Stainless Steel Forum (ISSF).
 
Although the production decrease was common to most stainless steel producing countries and regions, increases were recorded in the Asia region and China. The global decline follows a 17% increase in production during 2006, which occurred when distributors and service centers built up their stainless steel inventories.
 
Through 2007, stainless steel production in Asia grew by 6.3% to 16 million tonnes in 2007, bringing Asian production up to 60% of total world stainless steel production. Growth in the Asian region was driven by a 36% growth in China, which was again the leading stainless producing country. The strong increase in Chinese production is partially based on new capacity that came on-stream during 2007.
 
China produced 7.2 million tonnes of stainless crude steel in 2007, increasing significantly the gap compared to the next-largest producer, Japan, which produced3.7 million tonnes in 2007. All other Asian stainless steel producing countries suffered production declines of between 3% and 15%.
 
The Western Europe/Africa region reported a 13.3% decrease in stainless steel production. The region’s total volume for 2007 was 8.7 million tonnes.
 
Production in The Americas reached 2.5 million tonnes in 2007, a 15.2% decrease compared to 2006. The Central and Eastern Europe region produced a total of 365,000 tonnes of stainless steel in 2007, a 3.0% decrease compared to the previous year. The region is of minor importance in global stainless steel production.
 
Comparison on a quarter-by-quarter basis shows there was strong increase in stainless steel production during the first half of 2007. However, this was followed by a collapse in stainless steel production during the third and fourth quarters that occurred in the aftermath of the burst in the nickel price bubble.
 
The general economic trend was still strong during the second half of 2007, and there was healthy basic demand for stainless steel. ISSF estimates the real use of stainless grew by 7% during this period—with the growth apparently fed by a massive stock draw, the likes of which has not been seen before. ISSF estimates that almost 2 million tonnes of crude stainless steel were drawn from stocks in this period.
 
Developments in the price of nickel during 2007 caused a dramatic change in the types of stainless steel produced. Efforts by the stainless steel industry to market low-nickel or nickel-free stainless steel in order to protect market share contributed to the change.
 
The need to empty existing stocks of high-priced nickel-containing steels, to avoid heavy de-valuation losses, put additional pressure on the production of CrNi steels. The market share of CrNi steels (300 series) decreased to just 50% of total stainless steel production in the fourth quarter according to ISSF estimates. Just a few years ago, CrNi steels accounted for up to 80% of all stainless steel.
 
The International Stainless Steel Forum (ISSF) is a non-profit research organization, which serves as the world forum on various aspects of the international stainless steel industry. Founded in 1996, ISSF is legally a part of the International Iron and Steel Institute, but has its own Secretary General, Board of Directors, Committees and budgets.