Stainless Steel Mills May Implement Production Cuts to Strengthen Prices

Europe: As producers attempt to counteract price erosion in the face of weak demand, production reduction measures are anticipated to become increasingly prevalent. After buying activity slowed and prices dropped in the latter part of the first quarter, the world's crude Stainless-Steel production was projected to increase from the previous quarter by 800,000 tonnes, to 59 million tonnes. This would raise output by 6.8% above that of 2022.

Currently, producers are looking into possible techniques to use to rebalance supply and demand, particularly in Europe and Japan. One mill in the EU has already implemented brief shutdowns, and others are likely to follow suit with scheduled maintenance breaks or shift reductions. Japanese mills, which are already producing at levels that are substantially below their maximum capacity, could reduce output even further.

Since July 2022, the manufacturing PMI has not risen above 50. Since November 2022, the PMI has fallen below 50 in the US. Compared to Europe, the US market mood is a little more upbeat. In April, its manufacturing PMI increased by 0.8 points to 47.1. China's index dropped by 2.7 points to 49.2, while the EU figure fell by 1.5 points to 45.8.

In 2023, 6.2 million tonnes of Stainless Steel are expected to be produced in the EU. Despite major drops since late 2022, EU energy prices remain at historically high levels. Both inflation and interest rates are still high. In May, the German economy formally began a downturn. The demand for Stainless Steel is being harmed by these elements.

Considering this, the European supply chain's Stainless-Steel stockpiles are still high. There isn't much of a desire to purchase in bulk. Distributors are attempting to sell shares they acquired at a loss in late 2022 and early 2023. Sales that aren't profitable are raising more and more questions about certain companies' ability to survive.

East Asian markets are still experiencing muted sentiment, but South Korea has increased its full-year projection to 2.13 million tonnes. This stems from the Steelmaking facilities at POSCO, which were devastated by Typhoon Hinnamnor in September 2022, starting to produce again.

After the Lunar New Year holidays, a predicted increase in demand in China has so far not happened. The nation's economic recovery is questioned. In 2022, the floorspace of construction projects in the planning stages decreased by more than 7% annually. To date, through the end of April, this number has decreased by about 6% compared to the same period last year. Still, 5.4 percent growth in China's GDP is predicted for 2023. believes that in 2023, the United States will experience a lower level of the reduction in Stainless Steel consumption than Europe. The first quarter of 2023 saw a 43 percent year-over-year decline in US imports. The demand for locally manufactured Stainless Steel is anticipated to rise because of the reduced level of competition.