China's stainless imports may fall next year

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.