European stainless steel output seen down in 2009

By Anna Stablum

LONDON, Oct 30 (Reuters) - European stainless steel production in 2008 is seen at a lower-than-expected 7.6 million tonnes and for next year production is seen falling to less then 7 million, a top industry official said on Thursday.

Sluggish demand has cut stainless steel output in Europe in the third and fourth quarter 2008 and instead of producing a previously estimated 8.1 million tonnes, output is seen 6.2 percent lower, said Michael Wright, chairman of the Stainless Steel Division of the Bureau of International Recycling (BIR).

"For Europe as a whole, unfortunately we do not see any sign of good news, certainly for the next six months," said Wright, who is also Chairman of ELG Haniel Metals Ltd., referring to demand for stainless steel scrap from European mills.

Demand for stainless steel, which is widely used in kitchen appliances and cutlery, has fallen as consumers slow spending, due to fears of economic recession, and distributors delay restocking until the market stops sliding.

"Demand from the main UK domestic consumer, Outokumpu (OUT1V.HE), was substantially reduced in the third quarter and a further reduction is anticipated in the fourth quarter," Wright said at a BIR conference in Dusseldorf.

He said the world's largest steelmaker, Arcelor Mittal (ISPA.AS), also reduced scrap intake in the third quarter by at least 30 percent, versus the second quarter, and there was a further decline in the fourth quarter.

"As with the rest of the European mills they do not want to build up high raw material stocks in an uncertain market."

(Reporting by Anna Stablum, editing by Peter Blackburn)