The European stainless steel industry is resuming production but the future is said to be uncertain as the continent is ravaged by the Covid-19 pandemic.
According to the latest quarterly sector report from BIR Mirror, ‘the focus now is on evaluating demand and therefore capacity utilisation’ but little is clear.
Joost Van Kleef, who chairs the world recycling body’s stainless steel and special alloys committee, notes the industry is heavily impacted by the emergency. ‘The focus at the start of the pandemic’s spread to Europe was very much on health and safety and the continuation of production, and some positive results from all the related efforts have certainly been seen,’ he says. ‘Major EU stainless producers are back in production, although clearly to differing extents: everyone has restarted their most important outlets.’
But Van Kleef notes that PMI indicators are ‘dropping significantly’ with Germany’s IFO index, for example, down at 74.3, the lowest level ever recorded. ‘A sharp reduction in stainless production is expected,’ he concludes. ‘One positive aspect could be the anticipated decline in stainless imports into EU markets, which could support Europe’s own producers. Demand for stainless scrap will remain at a low level, with a further reduction expected for the summer months.’
The Asian perspective, delivered by committee member Vegas Yang of HSKU Raw Material in Taiwan, is that stainless scrap demand in China is much weaker because of COVID-19. ‘In Indonesia, however, the nickel ore export ban is still in force and so mills are biting into the stainless scrap market within China to make up for the lost nickel units. But given the weakness of demand, the end result is a standstill all round.’ And he adds: ‘By May, the market will hopefully return to greater calm and something more like normal.’
Doug Kramer, of Spectrum Alloys, say US business is also suffering. ‘From the contracting supply of and demand for stainless steel scrap to falling steel mill production and slumping demand from end-use sectors including transportation, energy and household appliances, markets are struggling across the board.’
He notes the coronavirus crisis comes on top of a difficult start to 2020 with nickel and stainless steel prices already under pressure and with stainless steel production continuing its migration towards Asia.
‘According to the latest figures from the International Stainless Steel Forum, melt shop production in the USA fell 7.6% last year to 2.593 million tonnes. More recently, the US steel mill capacity utilisation rate has declined to around 56-57%, down from over 80% this time last year,’ Kramer reports, adding that one positive note is the demand from healthcare systems for extra ventilators, oxygen tanks and hospital beds, all of which require stainless steel.
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