‘China could see CR stainless production surplus’

‘China could see CR stainless production surplus’

Li Cheng, chairman of China Special Steel Enterprises Association’s (SSEA) Stainless Steel branch, suggests that China’s present domestic CR stainless steel production can already meet market demand for the most part. Li Cheng’s remarks come as two rolling mills from Shanghai Krupp, two from ZPSS, four sets from Ningbo Baoxin, five sets from Taiyuan Steel as well as 300’000 thousand tons productivity from Guangzhou Lianzhong will come online one after another. The total production of these aforementioned projects adds up to 1.6 million tons, which some market watchers say translates into nearly 700’000 tons of surplus productivity for China. Such excess production might not be the best of news at a time when the market price of CR stainless steel sheet is lower than that of HR stainless sheet. Speaking at a press conference for the stainless steel industry, Li Cheng pointed out that the nickel’s global price has fluctuated in recent years, largely because of speculation surrounding China’s stainless steel demand growth. According to Li Cheng, China’s stainless steel industry has exhibited generally healthy development. In 2004, China’s per capita stainless steel consumption reached 3.5 kg, placing China at the forefront of consumption among developing countries. Per capita consumption could soon hit 4 kg, translating into total consumption of 5.2 million tons. Among developed countries, the US consumes slightly less than 7 kg of stainless steel per capita, while UK consumption is around 4-5 kg. Based on China's development progress, it is rational to believe that China’s per capita stainless steel consumption could reach 5 kg by the year 2010. Such a figure would equate to 6-7 million tons of total stainless steel consumption. Regarding stainless production, China’s stainless steel output stayed at low levels all throughout the 90’s. After the "9th five-year plan", China began strongly supporting the stainless steel industry. Taiyuan Steel and Baosteel established production bases, and the government encouraged civil capital to invest in the stainless steel industry. Currently, the stainless steel productivity of Shanghai No.1 Steel, Taiyuan Steel, and other civil-funded enterprises each total around one million tons, adding up to a total stainless output of nearly three million tons. In the long run, the stainless steel productivity of Shanghai No.1 Steel may reach 1.5 million tons, as will the productivity of Taiyuan Steel. Adding in 800’000 tons of new productivity from each ZPSS and Guangzhou Lianzhong, 500’000 tons from each Shanghai Krupp and Jiuquan Steel, as well as two million tons of new productivity from other private-funded enterprises, China’s domestic stainless steel smelting productivity may reach 8-9 million tons in total.