The current situation and future of the stainless steel industry with two lows and two highs-Zhejiang Benji Stainless Steel Co., Ltd

At present, the development status of the stainless steel industry presents the characteristics of low demand, low income, high supply, and high risk. As a result, in the future, the increase in stainless steel production capacity will be generally delayed, and the supply-demand pattern will also undergo profound changes. "On October 18th, Han Jianbiao, General Manager of Zhonglian Gold Information Network, analyzed the current development status of the stainless steel industry and made prospects for future development during the 2024 (6th) Stainless Steel and New Energy Materials Summit and Sulfur Industry Chain Autumn Market Exchange Forum Stainless Steel Industry Sub Forum.
Han Jianbiao analyzed the current development status of the stainless steel industry from the perspectives of "two lows and two highs" (low demand, low return, high supply, and high risk).
From the perspective of low demand, the overall demand for stainless steel in China has declined, with different varieties showing different performances: the growth rate of 300 series stainless steel production has slowed down, the growth rate of 200 series stainless steel production has decreased, and the growth rate of 400 series stainless steel production is impressive. Specifically, the performance of industries such as ships, electricity, and environmental protection that mainly use 300 series stainless steel is acceptable, but the consumption base in these areas is relatively low, and the demand in petrochemical, chemical, and new energy industries has significantly decreased; 200 series stainless steel is mainly used for civilian purposes and is closely related to poor consumption in the decoration and decoration industry chain related to real estate; The main use of 400 series stainless steel in large and small household appliances, kitchenware, and other fields has performed well, and automobile consumption has exceeded expectations, resulting in a significant increase in export volume.
From the perspective of high supply, the newly added 3 million tons of stainless steel production capacity in 2023 is all in the process of being released this year; However, only 1 million tons of the planned additional production capacity of about 5 million tons in 2024 have been put into operation so far. In addition, in terms of cold rolling, only the 2.76 million tons of newly added production capacity in 2023 is being released centrally, and the planned additions for 2024 are also being postponed. According to statistics from Zhonglian Gold, by the end of 2024, Chinas stainless steel steelmaking capacity can reach 49.88 million tons per year, an increase of 1.3 million tons year-on-year (limited capacity increase and release), with an increase of about 2.68%; Affected by the decrease in consumption, it is expected that the utilization rate of stainless steel production capacity in China will be 77.2% in 2024, with little change compared to 2023.
From the perspective of low returns, due to the release of new production capacity, the current stainless steel operating rate in China is over 90%, and high supply has led to a decline in industry profits. Meanwhile, due to the increase in production of 400 series stainless steel this year, the price of 400 series stainless steel in China has decreased. Han Jianbiao reminded that although stainless steel prices have rebounded recently, it does not mean that this price is sustainable, and there is a high possibility of periodic adjustments. At present, the price of stainless steel is in the low level range of nearly 10 years. However, the decrease in stainless steel prices has also provided it with more competitiveness in replacing other metal materials, "he said.
From a high-risk perspective, in the case of low profits and low demand, the production time of new production capacity may be delayed. Especially under the influence of various policies, investments, and other factors, if consumption does not significantly improve, the supply-demand pattern will undergo tremendous changes, causing low advantage, low profit, and continuous loss making enterprises to be quickly eliminated or merged and restructured. At the same time, influenced by the overall structural adjustment of the industry, there is a clear trend of ordinary steel enterprises turning to the production of stainless steel and special steel, and the overcapacity of stainless steel will intensify in the future.
Han Jianbiao also emphasized that the variety structure of stainless steel in China is undergoing changes. From the perspective of structural proportion, the stainless steel varieties in mature stainless steel markets such as Europe, Africa, and the Americas are mainly composed of 300 series stainless steel and 400 series stainless steel; Due to the high proportion of 200 series stainless steel in China and India, the proportion of 200 series stainless steel in Asia is much higher than in other regions. In recent years, the proportion of 300 series stainless steel in China has gradually increased, but there is still room for further compression of 200 series stainless steel, while 400 series stainless steel has a significant growth rate.
Subsequently, Han Jianbiao analyzed the current pain points in the stainless steel industry. One reason is that during the economic downturn, it will take some time for the government to implement favorable policies and other consumer stimulus measures, which means that the decline in demand for stainless steel will continue for a period of time. Secondly, there is fierce competition and overcapacity in the homogenization of mid to low end products; High end products still need to be imported, and there is an urgent need to strengthen technological innovation. Thirdly, the main raw materials for producing stainless steel - nickel and chromium resources - have a high degree of external dependence, and production costs are severely squeezed by upstream raw materials.

Regarding future development, Han Jianbiao believes that global stainless steel crude steel production will continue to grow in 2024, and Chinas contribution will significantly decrease. Specifically, the global stainless steel production in 2023 will be 58.444 million tons, with a year-on-year increase of 4.64%, with China and Indonesia contributing the most to the growth rate; It is expected that global stainless steel production will increase to about 60 million tons by 2024, with a year-on-year growth rate of 2.6% to 2.7%, and Chinas contribution will significantly decrease. From the perspective of production capacity, under the strict control of national production capacity indicators, it is expected that Chinas new production capacity will be limited by 2025, mainly concentrated in Qingtuo and Liyang Stainless Steel in Fujian. The existing or under construction production capacity is 2 million to 2.5 million tons per year, and the total production capacity after completion may reach 52 million to 52.5 million tons per year. Overall, Chinas stainless steel industry will present five major development trends in the future: mergers and acquisitions, forced overseas expansion, field division, industry extension, and technological innovation.

Zhejiang Benji Stainless Steel Co., Ltd.,