Stainless Steel Production Faces Short-Term Challenges, But Long-Term Growth Is Expected – April 12, 2023

Significant reductions

The year 2022 was not kind to the global stainless steel industry, with the world stainless association reporting a 5.2% decrease in melt shop production compared to the previous year. The most significant reductions came from the US and the EU, which contracted by 15% and 12%, respectively. China and other Asian producers also saw declines, though to a lesser extent. These numbers reflect the impact of the COVID-19 pandemic and energy price fluctuations.

However, the outlook for the industry in the near future is somewhat bleak. As energy prices normalize and China begins to recover from the pandemic, we can expect a rebound in production in 2023. The world stainless association forecasts an 8% year-on-year growth in production to reach 61 million metric tons in 2023, with China’s reopening being a significant driver of this growth.

Over the longer term, the global stainless steel industry is expected to see meaningful growth, particularly in China. This is because the country’s steel industry reforms, which aim to reduce carbon emissions, target carbon steels rather than value-added products like stainless and specialty steels. This means these reforms relatively untouched the industry’s growth potential.

Despite the expected growth, the industry will face challenges. Austenitic scrap ratios are expected to rise, which may pressure the ferrochrome supply and other alloys. However, the growth potential for these materials is significant, particularly for chromium and silicon alloys. Ferrochrome, in particular, is expected to benefit more from the growth in stainless steel production than ferrosilicon, which has less exposure to the industry.

In summary, while the global stainless steel industry faced short-term challenges in 2022, the industry is expected to rebound in 2023, driven by China’s recovery from the pandemic. Over the longer term, the industry is expected to see meaningful growth, particularly in China, and this growth will provide opportunities for the production of chromium and silicon alloys. The industry’s growth potential offers reasons for optimism, though challenges must be addressed to realize this potential fully.