chinese stainless fcast

China will consume 6.5 mln tons of stainless steel this year - official
By Ida Chen

Taiyuan. October 11. INTERFAX-CHINA - China is set to consume up to 6.5 million tons of stainless steel this year, up 9.24 percent from last year's 5.95 million tons, a senior industrial official told Interfax at the China Stainless Steel Application Development Forum 2007, held in Taiyuan yesterday.

"China has been the largest stainless steel consumer in the world for 5 consecutive years since 2002. In 2006, China's per-capita stainless steel consumption hit 4.6 kilograms, rising above the world average of 4.3 kilograms," Li Cheng, chairman of the China Special Steel Enterprise Association's stainless steel branch, said.

Li also revised a previous prediction for China's stainless steel production this year down to 6.5 million tons from 7 million tons, taking into account slashed production from domestic steel mills on the back of high nickel prices.

"Next year's stainless steel production in China will not grow more than 10 percent from this year," Liu added. According to a prediction from the association, China's stainless steel capacity will reach 12 million tons this year, up 20 percent from last year's 10 million tons.



Stainless steel production cuts

Li claimed that the majority of domestic stainless steel mills are still running on reduced capacity in an attempt to support stainless steel prices.

"Each company has adjusted its own production schedule according to its monthly sales performance. However, there is a consensus among domestic steel mills that reducing capacity is an effective way to maintain profitability in a market where nickel prices are experiencing high-level fluctuations," Li explained.

For example, Taiyuan Iron and Steel Group Co. Ltd. (TISCO), China's largest stainless steel mill, announced yesterday at the conference that the company will produce a total of 2.2 million tons of stainless steel this year, up from 1.11 million tons last year, but down from a previous company prediction of 2.4 million tons for this year.

Li commented that TISCO's final production figure is likely to be between 2 million and 2.1 million tons for this year, on the basis of currently production cuts.

A combination of high nickel prices and overcapacity of low-level stainless steel products in the domestic market has pulled down the growth of China's stainless steel consumption to 10 percent for the first half of 2007, compared to 40 percent in 2002.



Downstream consumption trends

The current rapid development of the oil refinery, power generation, chemical, transportation and machinery manufacturing sectors provides a great opportunity for the growth of stainless steel consumption in the future.

"By 2010, China's oil refining capacity will reach in excess of 90 million tons per year, with hydropower capacity at 190 million kilowatts, and automobile production capacity at 9 million vehicles," Li explained.

An official, surnamed Wang, from Changchun Railway Vehicles Co. Ltd., a leading urban railway vehicle manufacturer in China, said, "At the present time, China's use of stainless steel is increasing day-by-day, particularly in the public transport sector, where it is gradually replacing carbon steel as an environmentally friendly alternative which is also easier to weld and lighter. However, demand for high-end stainless steel products and product portfolio diversity from downstream sectors is also on the rise."

Li further commented that although more than 70 percent of China's stainless steel demand can be met by domestic production, the country is still relatively weak at high-end stainless steel production.

Major domestic stainless steel mills are now expediting the development of new products in order to meet the emerging needs of the market. For example, TISCO has already developed super duplex stainless steel, a high-purity ferritic steel mixed with compound stainless steel containing aluminum, titanium or copper this year, a TISCO official said at yesterday's conference.