* Overcapacity persists in Europe, globally
* China spending plan is supportive signal, not enough
By Silvia Antonioli
LONDON, Sept 14 European demand for stainless
steel is likely to remain weak at least until next year as
economic stagnation in the region and tight finance crimp major
consumers such as the automotive and construction sectors,
market participants said.
Stainless steel prices have shed about 15 percent of their
value in the last six months, due to overcapacity, poor demand
and falling prices for raw materials such as nickel.
Demand weakness will persist in Europe until serious plans
emerge to address the euro zone debt crisis, market players said
on the sidelines of the Metal Bulletin stainless steel
conference this week.
"I expect demand will remain weak, at least until 2013," a
Scandinavian trader said. "Nobody is very optimistic at the
moment. I don't even know if things will get better in the first
quarter next year."
Franz Rotter, a member of the board of Austrian steelmaker
Voestalpine, said in an interview there are no signals
that the special steel market will turn around at least until
"It's like the perfect storm: we have got the euro crisis
and the recession, we have got overcapacity, we have got cheap
imports and now a slowdown in China," a producer said, adding
that no more than one or two stainless steel companies worldwide
were still making money at present.
Importers of foreign material into Europe also said they
were finding it increasingly difficult to sell stainless steel
in the region.
One was particularly pessimistic.
"My company's view it that 2013 will be bad. Even worse than
2012," he said. "This is mainly due to scarce resolution of
European politician to solve the crisis. They are only offering
Stockholders, service centres and trading companies, which
are the middle-men between producers and end-users, were also
Due to the price fall of the last few months many of them
have seen the value of their inventories drop dramatically and
the smaller among them are being strangled by poor availability
Oversupply remains a main issue for the industry in Europe
Bernardo Velazquez, the chief executive of Spain's Acerinox
said this week that although some European mills are
reducing steel melting capacity, this will not necessarily help
the sector as nobody is idling rolling facilities, which process
crude steel into the final sale product.
Overcapacity and slowing demand are also major problems for
top stainless steel producer and consumer China.
A $157 billion infrastructure spending plan revealed by the
Chinese government last week is a positive sign for the steel
market but is still not enough to help steel prices in the near
term, market players said.
"This is positive but we need to see more of this," a source
at an Asian producer said. "A lot more."