Stainless steel prices may fall: Posco

Stainless steel prices may fall driven by increased global market competition between Chinese and European producers, Posco, South Korea's largest steelmaker, said.

"This year will be a turning point for the stainless steel industry,'' Posco President Lee Youn said in an interview in Kyoto yesterday.

China boosted output by 68 per cent to 5.3 million tonnes last year while global production rose 17 per cent, according to the International Stainless Steel Forum. Stainless steelmaker Outokumpu Oyj, based in Espoo, Finland, is cutting output this quarter by 10 per cent as consumers use inventories instead of placing orders. "Inventories in Europe are slightly high and if that continues to grow, European steelmakers will increase exports to Asia, while China is exporting to Europe," Lee said. "Stainless steel prices may collapse, but that will not be enough to make nickel collapse," he added. European prices of stainless steel have fallen 35 per cent this year, after rising 91 per cent in 2006, reaching $1,400 a tonne on May 18, according to Metal Bulletin.

Nickel on the London Metal Exchange has risen sevenfold in the past five years, reaching a record on May 9 and driving mills to increase output of stainless steel with higher chromium and manganese contents and nickel-free grades.

Stainless steel demand this quarter would be below that of the first three months of this year as customers seek cheaper alternatives to nickel, Arcelor Mittal said on May 16.