European Stainless steel demand has somewhat slowed in March after an excellent start in 2012. There is however no reason to be too pessimistic for 2012.
Germany will remain a growth engine in Europe and the market situation in the other Damstahl countries is not so bad as well.
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It is expected that these markets will perform again better than the rest of Europe, especially Spain, Italy and some other South European countries in 2012.
Fundamentals for Ni prices have changed due to a weakening Chinese demand for Ni and stainless. European buyers have reacted to the falling raw material prices and became more hesitant with new orders for stocks. It is expected that buyers will keep flat product stocks at relatively low levels in Q2/12 after temporary re-stocking in Q1/12.
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End user activity in important industrial uses have also somewhat slowed due to a stagnation for new orders. There is a certain risk that 2012 will become a repetition of the previous year: a strong Q1 and the remaining year with stability but little growth.
It is expected that the European stainless steel real demand will slightly grow to a market volume of 6.0 million t (~1% growth – 78% flat products). Demand in the Damstahl countries will grow somewhat faster (2-3%) than in the rest of Europe.
Mills expect an improved profitability in Q1/12, driven by raw material and base price increases. It was however not possible for the stainless steel flat product mills to fully succeed with envisaged Q1/12 base price increases all over Europe.
Mills have reduced stainless steel crude steel production by almost 30% in December 2011 (compared to November) in order to support market prices. In January 2012 and most likely in the other two months of Q1/12 as well, they have returned to around 700,000 t – 200,000 t more than in December (but a similar level as in January 2011).
Continuous strong growth is expected for the US stainless market (+5-10% growth in 2012), while China will climb slower than in previous years (~5% in 2012).