China’s stainless imports may fall next year
China may become the largest
stainless steel producer of the world in the next year, surpassing both
Japan and the US.
According to the Specialty Steel Enterprises Association of
China,
stainless steel imports may taper off significantly in 2006 as
China's domestic
stainless production capacity closes the gap with
consumption.
While
China's
stainless production was able to satisfy only half of 2004's 4.6 million tons of domestic
consumption, the industry's explosive growth has seen it able to meet 72 percent of
consumption so far this year. The
stainless production capacity of the country is expected to reach 9 million metric tons in two years.
By the end of the year,
Baosteel Group will increase its annual
stainless steel
production capacity to 1.5 million tons, and Taiyuan Steel is constructing a 1.5 million tons per annum capacity
stainless steel plant. Shanghai Krupp
Stainless and POSCO are also constructing
stainless steel facilities in
China. According to Taiyuan Steel,
China's total
stainless steel
production capacity will reach 16.3 million tons by 2010.
However, growth in demand is not keeping pace with the
production increase. The growth rate of
China's
stainless steel demand dropped to 6.43 percent in 2004 from 30 percent in 2003, and it shows no signs of getting better.
Stainless steel prices fell as much as 25 percent in June and July because of rising stockpiles and increased
production. The supply-demand situation is expected to become worse in 2006. When the new
production capacities are added, the country may even forgo
stainless steel imports altogether in 2006.