Metal Products News
- Stainless steel mills mull production cut
Date: 21-Jun-2007 Sources: (Shenzhen Daily)
STAINLESS steelmakers in China, the world's largest producer, are considering cutting production to prevent prices from weakening further, company sources said yesterday.
The moves could undermine international nickel prices, which hit an all-time high of US$51,800 a ton in May but have since retreated, trading at US$39,500 Tuesday, as high prices discouraged consumption.
Domestic stainless steel firms gathered in Shanghai earlier this week to discuss measures to support domestic prices, said a source from the stainless steel division of Baosteel, China's second-largest producer.
'It is very likely that we will have a production cut,'said an official at a Chinese unit of South Korea's POSCO. His company could cut production by 20 to 30 percent, he said, although he did not indicate a timetable or what actual production levels might be.
A final decision would be reached this week, he said.
The companies are also considering cutting sales to the domestic market in order to support local prices, the sources said.
China's stainless steel output jumped 68 percent in 2006 to 5.3 million tons, overtaking Japan as the world's top producer.
But an unusually high percentage, more than 20 percent, of last year's output partially substituted other metals for nickel due to soaring prices of the metal.
That portion was even higher, as much as 30 percent, at the nation's premier stainless steel firms such as Baosteel and Taiyuan Iron and Steel (Taigang).
The growth of China's stainless steel output and exports will not pose a big threat to foreign industries, Xinhua quoted Li Cheng, president of the stainless steel branch of the Chinese Special Steel Association, as saying in February.
The huge domestic demand for stainless steel is still on the rise, absorbing most of its own supply, Li said.
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