Stainless steel markets gain speed

Monday, 15 June 2009 17:32:37 (GMT+3)   |  
       

It is sufficient to look at the tables below to understand the latest situation around the world as regards stainless steel. In the first table, stainless steel production is seen to show a significant decrease this year as compared to last year; however, it is also observed that the decline rate of production has practically stopped as compared to the last quarter of 2008. Although global production has decreased by over 30 percent year on year, China has only registered a decrease of 10 percent. Besides the economic recession, inventory pressure has also led firms to experience difficulties in this period.

Table 1: Liquid stainless steel production (‘000 mt):

1/2009 production comparison to 4/2008 and 1/2008

Region

Quarter

Change %

Quarter

Change %

4/2008

1/2009

1/2008

1/2009

Western Europe/Africa

1,499

1,314

-12.3

2,432

1,314

-46.0

Middle and Eastern Europe

50

50

-0.5

96

50

-48.1

American Continent

373

411

+10.2

709

411

-42.1

Asian Continent (except China)

1,505

1,289

-14.3

2,167

1,289

-40.5

China

1,430

1,769

+23.7

1,972

1,769

-10.3

Worldwide Total

4,856

4,832

-0.5

7,376

4,832

-34.5

Source: International Stainless Steel Forum (ISSF)

The following table indicates the effects of the crisis on the various stainless steel grades in the first quarter of 2009 in comparison with 2008;

Table 2: Estimated percentage market shares of stainless steel grades

Grade Category

2008 (%)

Q1/2009 (%)

Chrome-Manganese Stainless Steels - CrMn (200 series)

11.4

13.6

Chrome-Nickel Stainless Steels - CrNi (300 series)

60.5

60.7

Chrome Stainless Steels - Cr (400 series)

28.1

25.7

Source: International Stainless Steel Forum (ISSF)

From the table it is seen that consumption of chrome-nickel stainless steels did not show much change in the first quarter of 2009 as compared to last year, while consumption of chrome stainless steel decreased substantially within the same period. This decline occurred in line with the large contraction seen in the automotive industry, in which chrome stainless steel is consumed. On the other hand, chrome-manganese stainless steel is widely used in China; thus, consumption of this product in the international market registered an increase. The same general situation can also be observed in Turkey, where the contraction of the Turkish automotive sector reached up to 40 percent. Total vehicle production in the Turkish automotive industry in May 2009 amounted to 87,127 units, marking a decrease of 30 percent year on year. According to the data from the Turkish Automotive Industrialists Association, in the first five months of the current year, a total of 305,240 vehicles were manufactured by the Turkish automotive industry, while 192,352 of this total consisted of automobiles. In the period in question, automobile production decreased by 39 percent year on year and overall vehicle production declined by 49 percent. In the first five months of the year, tractor production fell by 59 percent year on year.

As a country which widely imports stainless steel products, Turkey has continued to be directly affected by price changes in the international markets. Following the stimulus measures implemented in the local market, the increased activity observed in sectors such as furniture, automotive and white goods, etc., has positively influenced the stainless steel sector. Sales activities have also increased in Turkey, especially against the background of the price increases seen in the foreign markets in particular in the past two weeks. In addition, the increased activity observed in foreign markets has supported these price increases. Nickel prices, which normally reach a maximum of $13,000/mt, have most recently risen to the level of $15,400/mt. In the Turkish domestic market, European origin 2 mm 304/2B hot rolled stainless steel prices have reached the range of €2,100-2,200/mt.

While output levels of Turkish industry indicate a recovery, capacity utilization rates have also provided support for the view that things have started to get better. In May 2009, the overall capacity utilization rate of Turkish industry decreased by 12 percentage points to 70.4 percent as compared to May 2008. However, despite this general downtrend, this rate actually marked an increase of 3.6 percentage points in May as compared to April. Consequently, the capacity utilization rate has exceeded 70 percent for the first time in the last six months. This situation explains the recovery seen in the stainless steel sector. Similar to the situation seen across the world, it can be said that the stainless steel sector in Turkey has finally taken the foot off the brakes and has started to accelerate.


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