Global stainless steel production to grow by 4% in 2022

MEPS forecasts that global crude stainless steel production will reach 58.6m tonnes this year. That growth is likely to be driven by factories in China, Indonesia and India. Production activity in East Asia and the West is expected to remain range-bound.

China's stainless steel production rebounded strongly in the first quarter of 2022. Supply chain participants returned to the market with confidence ahead of the Lunar New Year holiday and the end of the Beijing Winter Olympics. However, production is expected to fall in the second quarter. In Shanghai, a key manufacturing hub, strict containment measures related to COVID-19 have forced many stainless steel consumer businesses to close. Demand is weakening, particularly in the auto sector, where sales fell 31.6 percent in April from a year earlier.

In the first three months of this year, Melting activity in India was already estimated at 1.1 million tons. However, there could be negative pressure on production in the next two quarters. Recently announced export taxes on several steel products could deter sales to third countries. As a result, domestic steelmakers are likely to cut production. In addition, cheap imports from Indonesia are taking a growing share of the local market. China's supply could surge in 2022.

It is estimated that major producers in Europe and the United States have increased stainless steel shipments during the January-March period. However, supply is not keeping up with demand due to strong end-user consumption. As a result, its domestic retailers are increasingly importing goods to meet their needs, especially from Asian suppliers. Volatile raw material and energy costs could limit production growth for the rest of 2022.

A deterioration in the market outlook due to inflationary pressures poses significant downside risks to the forecast. Higher energy costs, in part because of the war in Ukraine, could limit consumer spending. In addition, manufacturers continue to face supply chain delays due to COVID-19 related containment in China.