MEPS Forecasts Global Stainless Steel Production Growth to Slow Down
MEPS forecasts global crude stainless steel production at 1.82 billion tonnes, in 2019. This equates to an increase of 0.8 percent, compared with the figure recorded in the previous year. A slowdown in stainless steel demand growth is expected, as economic conditions soften, worldwide. A number of factors are adversely affecting stainless steel consumption, including political uncertainty, rising trade tensions and moderating business confidence.
MEPS predicts that growth in global stainless steel production and demand will slow in the long term, compared with the rapid expansion witnessed since the turn of the millennium. The stainless steel industry is entering a mature phase of development. The sector faces many structural challenges, such as stainless steel plants running at below optimal levels of capacity utilisation and government subsidies for inefficient stainless steel mills. Nevertheless, cause for optimism about the future of the stainless steel industry is apparent. The global population will continue to rise and demand for housing, infrastructure, machinery and consumer goods will persist. Furthermore, with its high degree of recyclability, stainless steel will play a key role in the circular economy, which aims to minimise waste and make the most efficient use of resources.
China Stainless Steel Production
China overtook Japan as the worlds largest crude stainless steel producing country, in 1996. At that time, Chinese stainless steel output was just 13 percent of the world total. The countrys share of global production had increased gradually through the 1980s and 1990s, but then it surged in the 2000s. Rapid capacity expansion was undertaken to feed growing domestic requirements for stainless steel. By 2010, Chinese output accounted for 45 percent of the world total. Chinas crude stainless steel production had climbed fivefold, from 127 million tonnes in 2000 to 639 million tonnes in 2010. Growth in Chinas capacity, production and consumption slowed, in the 2010s, compared with the previous decade but, nonetheless, remained substantial.
In the past few years, the Chinese government has put an increasing emphasis on addressing the problems of excess stainless steelmaking capacity and high pollution levels. In the first half of 2017, hundreds of induction furnaces, with a combined annual production potential of approximately 120 million tonnes, were closed. Subsequently, the national authorities are now able to capture a more accurate figure for the countrys total stainless steel output, for inclusion in the official statistics. MEPS had previously highlighted irregular finished stainless steel output tonnages from the reported crude stainless steel production figures. A number of electric arc furnaces were installed to replace the obsolete induction furnaces. In the long term, increased domestic scrap availability and environmental concerns should increase the attractiveness of the EAF stainless steelmaking route. Nonetheless, the BOF route is likely to remain the main source of stainless steel supply as a result of recent investments in blast furnaces.
IndiaStainless Steel Production
India surpassed Japan as the worlds second largest stainless steel producing nation, in 2018. The government has set a target of raising annual stainless steelmaking capacity to 300 million tonnes, with an eighty-five percent plant utilisation rate, by the 2030/2031 fiscal year. Current levels of growth in stainless steel demand and supply make this aim difficult to achieve. Amongst the many obstacles are the availability of infrastructure, land and raw materials, along with the substantial capital expenditure required by the, already indebted, domestic stainless steelmakers. Nonetheless, MEPS expects the increases in Indian stainless steel production and consumption to be the highest in the world, over the long term.
USA Stainless Steel Production
The United States was the third largest stainless steel producing nation, between 2000 and 2014, with the exception of 2009 amidst the Great Recession. Fiscal stimulus and Section 232 import measures have provided a boost to US stainless steel demand and production, in the past couple of years. However, the long-term outlook is relatively pessimistic. Economic activity is forecast to slow. A rising risk of recession, over the forecast period to 2023, is apparent.
South Korea Stainless Steel Production
South Korea became an established top ten stainless steel producing country in the late 1980s. The countrys crude stainless steel capacity increased by around 70 percent between 2000 and 2013. Output is forecast at around 72 million tonnes per year, over the forecast period. Despite the expectation of minimal output growth, in the coming years, plant utilisation is likely to remain at a relatively high level.
Brazil Stainless Steel Production
Since 1983, Brazil has been amongst the worlds ten largest stainless steel producing countries. A recession in 2015 and 2016 had a substantial negative impact on stainless steel output and demand. A modest recovery is anticipated over the forecast period. Growth in gross domestic product is predicted to average more than 2 percent in the 2019-2023 period.
Iran Stainless Steel Production
Iran is likely to feature in the worlds top ten stainless steelmaking nations, for the first time, in 2019. The authorities target stainless steelmaking capacity of 55 million tonnes per year by 2025. The country benefits from substantial reserves of natural gas and iron ore. However, MEPS predicts that the long-term goal will not be achievable, due to the substantial levels of finance and infrastructure required. Nonetheless, considerable growth in stainless steel output is envisaged. New electric arc furnace stainless steelmaking and direct reduced ironmaking capacity is being brought on-stream.
Vietnam Stainless Steel Production
Vietnam should establish itself inside the worlds top fifteen largest stainless steelmaking nations, in 2019. It is forecast to be the third main contributing country, after India and Iran, to global crude stainless steel production growth, in the period to 2023. A substantial amount of new stainless steelmaking capacity is scheduled for installation. MEPS predictions account for the possibility that not all the plans will come to fruition, due to financing issues and import competition.