China eyes boon from global stainless supply shortage
The disruptions to global supply began late February when extensive strikes were disrupting operations at several European stainless steelmakers, severely impacting their production and shipment capabilities, Mysteel Global notes. For instance, Outokumpu, a leading Finnish stainless steelmaker, endured a four-week strike that lasted until early April and caused the Helsinki-based maker substantial damage to its adjusted EBITDA, amounting to approximately EUR 80 million ($85.5 million).
Similarly affected was SSAB, Scandinavia's largest steel sheet manufacturer based in Stockholm, which reported an estimated SEK 300 million ($28.5 million) loss in operating results for SSAB Europe in this year's first quarter due to a strike that began on March 11.
Meanwhile at Acerinox, the prominent Spanish stainless steelmaker saw the 135-day strike at its Los Barrios factory finally come to an end on June 21, prompting the company to warn shareholders of a direct financial impact of EUR 31 million in the first quarter of this year alone. Acerinox said its Q1 stainless steel output had declined by 6% from the fourth quarter of 2023.
Delivery times for stainless products from factories in other European countries have also been extended for various reasons, mostly to August or September, causing many local distributors to hold inventories below demand levels, market sources observed.
The International Chromium Development Association (ICDA) predicted in May that Europe would be the sole region experiencing a decrease in stainless steel production in 2024, with the dip possibility being as large as 1.8%.
"These production disruptions in Europe provided us with a significant export opportunity," remarked a stainless trader in East China's Zhejiang province. "We can offer timely delivery and competitive pricing compared to local products, which is advantageous in overseas markets," he added.
Furthermore, Indonesia's Yongwang Stainless Steel, the joint venture between China's Tsingshan Group and Hongwang Group based in Morowali in central Sulawesi, halted production on its 700,000 tonnes/year stainless cold rolling mill for over two months from June 11 not due to technical issues, Mysteel Global notes. The mill is primarily producing austenitic stainless CR and the suspension may redirect orders to Chinese stainless steelmakers, remarked an analyst based in Wuxi, a major stainless hub in East China.
Sources suggest that the suspension at Yongwang might also be influenced by ongoing anti-dumping investigations into stainless steel products from Indonesia by certain countries.
The supply shortages abroad have created a window of opportunity for Chinese stainless makers to expand their steel exports. However, this has also attracted increased scrutiny and trade disputes from importing countries concerned about fair competition and dumping practices, cautioned a market watcher.
For instance, Turkiye's POSCO Assan TST filed an anti-dumping application on May 8, alleging unfair competition from low-priced stainless steel products originating from mainland China, Indonesia, and Taiwan.
Moreover, India's Ministry of Commerce and Industry announced on June 15 that it was extending countervailing duties on welded stainless steel pipes and tubes from China and Vietnam for an additional five years, following the first sunset review.
According to data from China's General Administration of Customs, from January to May this year China's stainless steel exports to India still totalled 219,000 tonnes, despite a 14.1% decrease compared with the same period last year, while exports to Turkiye reached 168,000 tonnes, marking a 7.3% increase from the first five months of 2023.
Written by Adele Pan, panqinjie@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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