News item
22 Apr 08
No power, no chrome
What has been assumed is now confirmed by statistics. The Brussels based International Stainless Steel Forum (ISSF) published its preliminary figures at the beginning of April, showing stainless steel production in 2007 to be down by 2.9% over the previous year. With the exception of Asia, where output grew by 6.3% over the year before, the drop for the year as a whole has hit mainly the regions of Western Europe and Africa, with a cut of 13.3%, and the American continent with a fall of 15.2% in tonnage achieved, all figures compared to the previous year. In a quarterly review, information becomes more detailed. In the first half of the year, there was at first a clear increase in production, but the second half of 2007 was hit globally by drastic production cuts, caused by the correction in nickel prices and the trade reduction of stocks. In the third quarter, the cuts in production compared to the same quarter of 2006 were 34.6% in Europe / Africa, and 31.7% in the American region. Even Asia, which had actually increased production, seen over the whole year, due to the capacity expansions in China, saw a reduction in the third and fourth quarters of 2.5% and 8.8% respectively. The cuts, according to estimates of the ISSF have been seen mainly in the field of austenite Cr-Ni-Steel. Based on its figures, the ISSF has determined that the portion of the so-called 300 series has been reduced to about 51% in the fourth quarter of 2007, as opposed to over 80% in years gone by. Further figures in respect to this, especially in view of the increased prices of chrome in the first quarter, can be awaited with increase interest. Chrome is used especially in non-300 stainless steels.
A German Exchange revue (Börsen-Zeitung) has observed in an article that commodity prices, especially the heavily increased prices for ore and coal, have put an added strain on steel companies. Although these market observations do not provide us with new revolutionary aspects, seen in a different light, however, they give a view which cannot be stressed enough in Europe: steel companies have been hit in different ways by increased prices. Decisive for the differences are the degrees of their self-sufficiency and terms of contract deliveries. In other words, self-reliance is the main order of the day for commodity policy in the steel groups. In light of existing strategy insecurities, short-term purchases on the spot market – seen in some areas of commodity procurement – are not really the long-term answer to the problem, quite the opposite: stability for future dependable deliveries will not be reached in this way.