Global stainless steel production to grow by 4% in 2022

MEPS predicts that global crude stainless steel production will reach 58.6 million tonnes this year. Growth is likely to come from businesses located in China, Indonesia and India. Melt activity in East Asia and the West is expected to remain limited.

Stainless steel production in China recovered sharply in the first quarter of 2022. Supply chain participants returned to the market in high spirits following the conclusion of the Lunar New Year holidays and the Beijing Winter Olympics. However, output is forecast to decline in the second quarter. Strict Covid-related lockdown measures at a key manufacturing hub in Shanghai have forced the closure of many stainless steel-consuming businesses. Demand is weakening, especially in the automotive sector, where sales fell 31.6% in April compared to the same period last year.

India's smelting is estimated to have reached 1.1 million tonnes in the first three months of this year. However, production in the next two quarters may face negative pressure. The recently announced export duty on a number of steel products is likely to deter sales to third countries. As a result, domestic steel producers may cut production. In addition, cheap imports from Indonesia are taking an increasing share of the local market. Shipments from this country are likely to grow in 2022.

Major European and US manufacturers are estimated to have increased their stainless steel shipments between January and March. However, supply cannot meet demand due to strong consumption by end users. Consequently, domestic warehouse companies are increasingly meeting their needs with imported goods, especially from Asian suppliers. Volatile raw material and energy costs could limit production growth until the end of 2022.

Deteriorating market prospects as a result of inflationary pressure creates significant downside risks to the outlook. The increased cost of energy, due in part to the war in Ukraine, is likely to limit consumer spending. In addition, manufacturing companies continue to face supply chain delays due to Covid-related restrictions in China.