Feb 27, 2023
Stainless steel production forecast at 60mt in 2023

MEPS forecasts that global crude stainless steel production will reach 60 million tonnes, in 2023. Significant contributors to this growth will be steelmakers in China and Indonesia.  

While India is likely to remain the third largest stainless steel producing country next year, its output is predicted to surge by more than ten percent. The authorities in that nation are investing heavily in major stainless steel-consuming infrastructure projects.  

Downside risks to MEPS’ latest forecasts include geopolitical tensions and the recent period of destocking in the West lasting longer than expected. However, falling energy costs and easing inflationary pressures provide some cause for optimism in the stainless steel market. 

China 

In China, production in the fourth quarter of 2022 was higher than anticipated, due to the government’s decision to relax Covid-related restrictions. This move boosted market sentiment, and, as a result, domestic steelmakers lifted their output. Moreover, the authorities are providing stimulus to the indebted property sector, which many market participants believe will fuel economic activity.  

The International Monetary Fund predicts that China’s GDP growth will rebound to 5.2 percent, this year. This should support key stainless steel-consuming sectors such as construction and consumer appliance manufacturing. Consequently, MEPS estimates that stainless steel production will reach 34 million tonnes, in 2023.  

Europe 

In Europe, output in the July/September 2022 period decreased by approximately one third, quarter-on-quarter. Local mills withdrew melting capacity, due to weakening demand from customers. High interest rates and energy costs caused end-user consumption to fall.  

However, production data for October/November 2022 suggests that output should recover, to 1.47 million tonnes, in the fourth quarter. Furthermore, several major stainless steel producers expect shipments to improve, in the first quarter of 2023. They believe that restocking will begin in the short term. Recent reductions in energy costs, and signs that peak inflation has already been reached, are also fuelling market confidence. 

United States 

US production in the fourth quarter of 2022 is estimated to be 450,000 tonnes. The recovery in melting activity, in the first three months of 2023, is expected to be slower than that in Europe. The period of destocking undertaken by local distributors may last longer than previously foreseen. However, melting activity should rebound in the middle of the year, for seasonal reasons. 

East Asia 

In South Korea, output in the final three months of 2022 reached only 161,000 tonnes. This was due to hurricane damage to POSCO’s stainless steelmaking facilities, sustained earlier in the year. However, the company recently announced that its stainless cold rolling mill came back online, in January. MEPS envisages a staged ramp-up of production in 2023, with the total for the year reaching 2 million tonnes. 

Production in 2023 is forecast to increase, year-on-year, by 7 percent, in Japan, and 8.5 percent, in Taiwan. Improving market sentiment in East Asia should support an upturn in stainless steel consumption, in 2023. Nonetheless, while peak inflation may have been passed, end-user demand in segments such as white goods and catering equipment may remain constrained.