Chinese Stainless Steel Troubles Global Markets

Uncategorised / Tuesday, June 5th, 2018

An abundance of stainless steel in China following a ramp up of new production in Indonesia is threatening stainless mills globally.

Well known for making and consuming around half of the worlds stainless steel, China became a marginal net importer of hot-rolled stainless steel coil last December for the first time in 7 years according to the International Steel Statistics Bureau.

This major cultural shift comes after Chinese owned stainless steel giant, Tsingshan, started production at a giant Indonesian plant, predicted to have an annual capacity of 3 million tonnes by the end of 2018, equivalent to 6%, of last year’s global flat stainless steel capacity.

Tsingshan Stainless Steel

Aerial view of Tsingshan

Even more output is expected with China’s Delong Holdings set to start production and its Indonesian stainless steel plant in 2019. Experts are predicting that with both Delong and Tsinghshan fully ramped up, Indonesian steel capacity could rise to 5 million tonnes, or just under 10% of global capacity.

The plant in Indonesia sells most of its stainless steel to China, where stocks have risen 80% since the end of December, hitting their highest in more than 8 years. But stainless steel producers outside China are also concerned, with Finland’s Outokumpu reporting first quarter profits more than halving, expecting more of the same this quarter.

Spain’s Acerinox also reported a drop of 40% in the first quarter earnings, with experts suggesting low-cost capacity in Indonesia are weighing on Acerinox in Europe and Africa.