Most Asian Steel Plants Working at Close to Capacity

Asian average stainless steel prices advanced in line with MPES February forecasts. Increases were noted in three out of the four countries researched. High inventories in China are keeping prices under control. Demand from end-users in the nation also cooled slightly this month. Many steelmakers across the region are now producing close to full capacity. Consumption by the automotive and white goods sectors continued to recover.

Our forecasts have been upgraded since February. Raw material costs are likely to escalate further over the coming months. This will, almost certainly, push stainless steel selling figures higher in the short term. Strong demand from some consuming sectors in the region is likely to add to the upward price pressure. Export opportunities are also expected to rise as values in the west improve. However, bloated stock levels in China could limit the potential for large advances in transaction numbers in this country.

Asian stockists are unlikely to build high inventories during 2010. Restricted access to finance by the Chinese government could slow the growth in steel sales volumes. This, coupled with an anticipated softening in mill input expenditure, is expected to push stainless prices lower in the final two trimesters. A pick-up in demand after the 2011 lunar holidays should then help to lift transaction values early next year.