Stainless prices down as experts warn of overcapacity

With prices in the home market for stainless steel falling this month, consultant MEPS (Europe) of Sheffield say there is an uncertain outlook for the stainless steel sector. The firm points to oversupply being a factor in most regions of the world and says that production excesses in the first half of 2000 need to be reigned back to bring supply and demand into reasonable balance. In anew report on the stainless market, MEPS writes: “We detect a considerable amount of complacency from the steelmakers about the potential for overcapacity. During the first half of this year, the world's stainless steel industry was producing at an annualised rate of 20 million tonnes. This is sufficient to meet the anticipated market requirement to 2004 – assuming the trend growth rate of the 1990's continues into the next decade. Substantial extra capacity is planned to come on stream before that date.” The company puts the global stainless oversupply down as one of the factors that have contributed to a steady decline in the LME price for nickel over recent weeks and it forecasts further falls. “Scrap prices are being pulled down and availability is high – particularly in Europe. Stainless steel consumers will be pushing for price reductions for the finished products in upcoming negotiations.” Across the Atlantic, the US market is seen as under severe price pressure from an excess of supply. In the Far East production curbs have been made in Taiwan as a result of poor orders from China. This situation has eased somewhat but output rates have not been lifted back to earlier levels yet. Japanese mills increased supplies during the first six months by about 13% but their domestic demand is only slightly up on the year earlier figures and a return to 1999 output is probable in the final quarter. Full copies of the MEPS report from: MEPS (Europe) Limited, 263 Glossop Road Sheffield S10 2GZ, tel: 0114 2750570 fax: 0114 2759808 email: MEPS (Europe)