China increased production by 12.6% year-on-year... All other countries and regions saw a decrease.
66% of STS crude steel production is from China... A record high and excessive production compared to market conditions.
While the rest of the world has been reducing stainless steel (STS) crude steel production, China has increased its production by over 10% compared to the previous year. This is cited as one of the reasons for the global weakness in stainless steel prices.
The World Stainless Association (WSA) recently released statistics on global STS crude steel production for 2023. Last year's global STS steel production was 58.44 million tons, an increase of approximately 2.6 million tons, or 4.6%, compared to 2022. This is even higher than the 58.29 million tons in 2021 when the STS industry was thriving due to post-COVID-19 pandemic retaliatory consumption.
However, the global production performance in 2023 is evaluated as an illusion caused by China's 'solo' production surge. China's 2023 STS crude steel production was 38.676 million tons, an increase of approximately 6.1 million tons, or 12.6%, compared to the previous year.
Notably, China's share of STS crude steel production increased from 58.3% in 2022 to 66.2% in 2023, a rise of 7.9%. China accounted for about two-thirds of the world's STS production. From 2018 to 2022, China's annual production share remained in the 50% range.
On the other hand, STS crude steel production decreased in countries and continents excluding China. The largest decline was in the United States, where crude steel production in 2023 plummeted by 9.6% year-on-year to 1.824 million tons. Production in Asia (excluding South Korea and China) and Europe also decreased by 7.2% and 6.2% year-on-year, to 6.88 million tons and 5.902 million tons, respectively.
The 'other' regions, including South Korea, Indonesia, Brazil, and Russia, produced 7.163 million tons, accounting for 12.3% of the total production in 2023 (a decrease of 1.3 percentage points), a 5.2% decline from the previous year.
In the case of South Korea, POSCO, the only STS crude steel producer, recorded a stainless steel production volume of 1.633 million tons in 2023. This represents a 10.6% increase compared to the previous year, but it is interpreted as a base effect due to production disruptions caused by Typhoon Hinnamnor in September 2022. When compared to 2021, POSCO's 2023 production still decreased by approximately 363,000 tons, or 18.2%.
Last year, China's steel industry saw weakened production regulations and reduced oversight of output cuts by regional authorities as the government encouraged exports and self-sufficiency in the steel sector. As a result, while the global STS market reduced production due to a market downturn, Chinese STS mills increased their production. Major local STS mill Tsingshan Steel announced that their production had reached record levels.
However, due to the global economic downturn, the increased production did not correspond with a rise in exports or domestic consumption, exacerbating the issue of overproduction. In this context, the China Stainless Steel Council (CSSC) is encouraging the production of high-value-added products, anticipating a recovery in consumption for applications such as drainage pipes and marine structures in 2024.
Meanwhile, in the recent global STS market, some countries and STS mills are expressing optimism about local demand improvements and profitability recovery. In Europe, supply shortages have become an issue due to disruptions such as strikes at Outokumpu and Acerinox. Additionally, China's STS steel exports in January and February this year have reportedly increased, suggesting the possibility of increased STS crude steel production in various regions.
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