According to MEPS “Global stainless steel production is still expected to reach a record level of 29 million tonnes this year.” MEPS added that “During the first quarter, most markets across the world have been quite soft. This was the result of unexpectedly large increases in steelmaking during the final trimester of 2007 in the EU and China.” MEPS said “These actions prompted us to make an upward revision to our estimate for 2007 global crude stainless supply, to a figure near to 27.9 million tonnes. This represents a modest 1% reduction on the outturn in the previous twelve months. The market was extremely tight in 2006 but last year it was in surplus. This is likely to be the picture throughout most of 2008.” As for the EU, MEPS said “The steel mills in the EU have lost substantial volumes of export business to China over the past two years. Local market demand is fair but is not rising sufficiently quickly to make up for weaker foreign sales. Consequently, we predict total output this year rising marginally from 2007 but falling well below the 2006 outturn. In Japan, inventory levels are excessive. The mills continue to regulate availability. A small output gain is forecast for 2008. Severe production cuts in South Korea have helped to control the oversupply situation. This is likely to continue to mid-year. Rising steelmaking is anticipated in the second half. A similar picture is forecast for Taiwan.” MEPS added “Inventories in the US are at a low level. Demand on the mills should improve during the second half of this year pushing up total production to slightly above the 2007 figure but below the outturn in the boom year of 2006. Import volumes are likely to be reduced due to the weak dollar. We anticipate stainless steel production rising in 2008, year on year, in India, Brazil and South Africa. The gains will be limited due to relatively weak export markets.” MEPS concluded “Despite poor demand in the early part of this year, we forecast higher output in China compared to 2007. However, the improvement will be at a much slower rate than in recent times. Substantial new capacity is available but plants will be operated at much less than maximum utilization rates.”
