Global Stainless Steel Crude Steel Production Expected to Decrease by 1% in 2023, China’s Share Further Expands
In 2023, China’s stainless steel crude steel production increased, while overseas production saw a significant decline, leading to a potential 1% global decrease in stainless steel crude steel production. China’s share of stainless steel crude steel production is expected to further expand.
It is anticipated that global stainless steel crude steel production will decrease by 1% in 2023. Specifically, China’s stainless steel crude steel production is projected to increase by 1.4 million tons to 35 million tons, a year-on-year growth of 3%. Meanwhile, Indonesia’s production is expected to decrease by 840,000 tons to 3.93 million tons, and production in Europe and the United States is also expected to see a significant reduction, exceeding 1 million tons.
Trends in China’s Stainless Steel Industry in 2023: Overcapacity, Cost Reduction, Shift in Price Focus
The domestic stainless steel market continues to face overcapacity, with costs remaining high over the past two years. This has made it difficult to generate alternative new consumption. Additionally, the base of new consumption areas is relatively small, providing limited room for significant growth. As demand approaches saturation, excess supply has led to sustained price declines. Given the current macroeconomic situation, the possibility of a reversal in the stainless steel supply-demand relationship is low.
In 2022, China’s stainless steel crude steel production reached 33.6 million tons, with an apparent consumption of 32.33 million tons. However, the national stainless steel crude steel production capacity reached 47.42 million tons, significantly exceeding demand. Plans to release 4.36 million tons of capacity in Liyang, Fu’an, and Hebei in 2023 have added immense pressure to the industry. Simultaneously, the scale of enterprises is gradually expanding, with future capacity becoming more concentrated. Projects scheduled for completion after 2023 will collectively add a capacity of over 10 million tons, far exceeding the growth rate of demand.
Since 2022, stainless steel prices have been on a downward trend. The surplus situation of nickel pig iron and high-carbon ferrochrome continues, with the center of gravity of raw material prices shifting downward, leading to a decrease in stainless steel costs. From April 2022 to the present, an oversupply of stainless steel combined with a decline in major raw material costs has caused prices of mainstream 300 series stainless steel products to enter a downward channel. In early April 2022, the domestic market price of high nickel iron was 1630 yuan per nickel, high-carbon ferrochrome was 9200 yuan per 50 basis tons, and the cash cost of stainless steel 304 cold-rolled was 18800 yuan per ton. By early July 2023, the domestic price of high nickel iron had fallen to 1085 yuan per nickel, high-carbon ferrochrome to 8600 yuan per 50 basis tons, and the cash cost of stainless steel 304 cold-rolled to 14600 yuan per ton.
Characteristics of China’s Stainless Steel Industry: Increased Competition, Clear Substitutes
Advantageous capacity increases loading and expands market supply.
In the first half of 2023, the new-caliber crude steel production of 41 domestic stainless steel plants surveyed by Mysteel reached 16.9296 million tons, a month-on-month increase of 1.7% and a year-on-year decrease of 0.1%. The crude steel production of 33 stainless steel plants was 15.6387 million tons, a month-on-month decrease of 0.88% and a year-on-year decrease of 2.62%. Among them, new advantageous projects such as Xinhai and Qingshan saw a rapid increase in production capacity and market supply, while enterprises with cost disadvantages in the 300 series in South China and other regions saw a significant reduction in production.
China’s Stainless Steel Imports and Exports Both Decrease Significantly Year-on-Year
For imports, the significant decrease in supply from Indonesia is the main factor contributing to the decline, particularly reflected in the reduced production of 300 series billets in Indonesia.
Regarding exports, weak demand for stainless steel in overseas markets and increased trade barriers have led to a decline in exports.
From January to June 2023, the net export volume was approximately 1.1961 million tons, an increase of 460,600 tons or 62.6% year-on-year.
Consumption of 200 and 400 Series Decreases Year-on-Year, While Consumption of 300 Series Increases
Currently, the overall performance of imports and exports has been relatively flat, and there will be a slight increase in Indonesian imports in the third quarter, but this is not the main contradiction in the market. Domestic demand is comparable to the same period in 2022, but consumption of the 200 and 400 series has decreased year-on-year, while consumption of the 300 series has increased. Demand is steadily increasing in the second and third quarters.
Demand growth is slow but sustained. Among them, demand in the energy, transportation, and hardware sectors has increased significantly, while the decline in demand in the consumer goods industry is notable.
Consumption in industries such as agriculture, food, textiles, and pharmaceuticals has been relatively sluggish, with a significant decline in demand. Demand for projects in the chemical industry, batteries, semiconductors, and metal products remains relatively stable. Overseas projects in nickel-cobalt-lithium equipment, ship railways, LNG, photovoltaics, solar thermal, and lithium battery energy storage have all shown increases. Stimulated by subsequent policies, the machinery manufacturing and construction industries are also expected to experience some recovery and growth.