New World Order Reconstructs Stainless Steel Market

Global stainless steel production reflects the shift in relative size and influence between the developed and emerging economies of the world, writes MEPS Global in a new report. Primary stainless steel production in China has grown nearly fivefold since 2006, accounting for about 55 percent of the world's total in 2016. India overtook Japan this year to become the world's second largest stainless steel producer.

Indian stainless steel production continued to grow from 8 percent to 9 percent year on year. It is expected to reach 4 million tonnes in 2018. This growth is supported by an increase in domestic demand from the automotive sector, as well as construction of houses and infrastructure. If the country's production capacity exceeds its domestic consumption, there will be a need to develop export markets. In these efforts, India will face the challenge of all new suppliers - to convince customers, especially in the West, that the quality of their products is acceptable.

China is several steps ahead of India on this journey. Over the past two decades, its stainless steel production capabilities have grown significantly. For several years, manufacturing overtook domestic consumption, forcing Chinese manufacturers to seek overseas customers. In the face of global competition and widespread economic downturn, Chinese sellers have slashed their prices to secure sales. This led to massive anti-dumping levies - and punitive tariffs, or duties applied by many countries, against Chinese imports.

The recently announced joint venture between China's Tsingshan Group and US manufacturer ATI, subject to regulatory approval, will allow the Indian side to ship slabs to the US for rolling and further processing. The resulting cold-rolled sheets will then be sold by ATI as, in fact, a domestic product. We should expect this model to become more widespread as the production of highly profitable stainless steel products expands in developing countries.