Stainless steel at a glance

• Demand: Demand from end-users remained robust in the past months, whilst stockholders reduced their orders in later part of 2011. This is changing at the moment.

Rising alloy surcharges and base prices in combination with low stock levels in some markets lead to a strengthening order-book for flat- and long products. The market situation is better in Northern than in Southern Europe.

But even in the soft market environment there, market participants expect an increasing demand and starting up-stocking until the end of quarter 1.

• End Use Sectors: It is expected that the ‘real’ stainless steel demand in Europe will grow by only 1-2% in 2012. Transportation (especially automotive) is the only segment with a certain risk of a substantial downturn this year with some analysts expecting a 5% drop. A slight drop is also expected for the building/construction sector. Industrial uses (+3% for stainless use) will provide further growth amid a softer economic environment, whilst consumer goods are expected to stagnate (+1% growth) in 2012.

• Stocks: Supply chains in many European countries run now low after a long period of de-stocking since Q2/11. In Germany, the stock reach (flat products) dropped to an annual low at the end of 2011, indicating that re-stocking becomes likely. Stocks for bars (hot rolled- and bright bars) are less critical.

• In Damstahl-Land, stainless steel demand is, with the exception of the United Kingdom, substantially stronger than in South-Western Europe (Italy and Spain). It is expected that stainless steel demand in Germany, Sweden, Denmark and Norway will grow above European average in 2012.

• Mills: Price stabilisation has absolute priority for stainless steel mills at the moment. Following a normal pattern, European Q4/11 production was above Q3/11, which is traditionally the weakest quarter of the year. We expect that mills will not expand production in Q1/12 in order to support further price increases. This will then lead to lengthening lead times which sets the stage for rising base prices. The 4 big European stainless steel mills have to return to profitability in 2012 in order to regain support from investors, who currently avoid our industry.

• Macroeconomics: the PMI (see page 5) indicates continuous slump in Europe’s manufacturing sector. But, this negative view is not confirmed by our industry contacts who expect slowing growth, but no new recession.
Source: Damstahl