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Specialty report: the state of stainless: global demand for stainless products was almost too good to be true in 2004. Can the boom continue in 2005 and beyond?

Article Excerpt
In spite of a weakening dollar, the U.S. price of stainless is now the highest in the world. Low nickel stocks, along with stronger demand from China and continued strength in the U.S. market, promise to keep stainless prices high, predicted Markus A. Moll, senior market analyst with Steel & Metals Market Research (SMR), Ehrwald, Austria. Moll was a featured speaker at last month's Metals Service Center Institute Specialty Metals Division conference in La Quinta, Calif.

Stainless steel is a $63 billion global market, of which flat products comprise $51 billion and long products $12 billion. World stainless production grew by almost 9 percent in 2004.

From 1950 through 2004, stainless production grew at an annual rate of 6 percent, to 27 million tons. SMR forecasts the stainless market will continue to grow at a healthy 5 percent rate through 2010, to 36 million tons.

Demand in the United States grew by about 8 percent last year. Eastern Europe led the world with a whopping 25 percent growth in demand, followed by Asia at around 13 percent. Growth in Western Europe was a sluggish 3 percent in 2004, Moll reported.

China, though a relatively small stainless player today, will become more of a factor in the next five years. Its production of cold-rolled sheet and strip has jumped 42 percent since 1995, while its consumption rose 24 percent, and exports have climbed 60 percent. Chinese growth rates are high, but also highly erratic, Moll said, forecasting 13 percent average annual growth for the Asian giant's stainless market through 2010.

Moll urged distributors to think of themselves as part of the global supply base for stainless, but they should also encourage investment in their home market. Don't be shy about traveling down the value chain to offer services, and invest only in state-of-the-art processing technology to meet customers' growing expectations for quality. "Fix it now, even if it ain't broke yet," he advised, "while you have the money."

MIXED RESULTS, POSITIVE OUTLOOK

Since the late 1980s, stainless consumption has grown at a 6.5 percent rate in North America, from 11 pounds to almost 20 pounds per capita. The market has recovered slowly, however, since the disastrous year of 2001, said panelist Brian Leslie, director of marketing for the Specialty Steel Industry of North America, a Washington, D.C., trade group.

Hot-rolled sheet shipments showed a downward pattern from 2000 through 2003, but recovered in 2004 to about 75,000 tons. Hot-rolled strip shipments rebounded to 2002 levels, around...