Market review
Stainless steel demand was heavily influenced by the global recession in 2009. The collapse in credit availability had an adverse effect on business conditions and created uncertainty, causing a reduction in business and consumer spending. As a result many stainless steel users were forced to introduce a variety of both temporary and permanent production stoppages and cost reduction measures. These actions in turn reduced stainless steel demand significantly and, subsequently caused the stainless steel industry to operate at relatively-low capacity utilisation rates.
Stainless steel demand was heavily influenced by the global recession in 2009.
Global stainless steel end-use consumption fell by 9% in 2009 following a decline of 6% in 2008. China was the only region to register positive growth in 2009 with year-on-year consumption increasing by 18%. Europe was the region that was affected worst, with demand down by 26% following a 3% fall in 2008. Demand in North America was down by 24% following a 19% fall in 2008. Global end-use consumption is expected to grow by 10% in 2010, with positive growth expected to return to all regions.
Demand performance in 2009 in industry-led stainless steel consumption segments was poorer than in consumer-related industries – which were harder hit by demand declines in 2008. The largest declines in demand in 2009 were experienced in the industry-related chemical, petrochemical, energy and process & resources end-use clusters. This was a reversal of the situation in 2008 where demand reductions were lowest in industry-led clusters and highest in consumer related industries.
Demand in the chemical, petrochemical and energy segments fell by 23% year-on-year, while demand in process & resources segment fell by 16%. Consumption in all these industries was severely affected by restrictions in the availability of finance and subsequent delays in project approval. In contrast, stainless steel demand in the consumer-related catering & appliances segment grew by 2%. Compared to industrial and commercial purchasers, consumers were relatively more willing to spend during the year. This was particularly true in China, where demand for stainless steel in catering & appliances grew by 20% in 2009.
Global stainless steel consumption in the architectural, building & construction cluster fell by 9% in 2009 following a 7% decline in 2008. Activity in the commercial building construction sector remained at a low level in the developed countries. Although governmental stimulus packages had some positive impact, only a small proportion of this market – products such as re-bars and material for use in bridges – has an effect on demand for stainless steel.
Global demand for stainless steel in the transportation cluster declined by 13% in 2009 following a fall of 12% in 2008. In Europe and USA, the wreckage bonus system dampened the negative impact on order intake in the Automotive sector, but there could still be a negative effect on demand in 2010. On the other hand, automotive demand in China and some emerging markets exhibited strong growth in 2009.
Long-term prospects for stainless steel demand remain robust. SMR estimates that the average annual growth in worldwide stainless steel consumption will be 5.45% (CAGR) in the 2009–2020 period. Being a leading producer of stainless steel, Outokumpu is well positioned to capitalise on the worldwide growing demand for stainless steel.
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| 2009 | Change % | 2008 | 2007 | 2006 | 2005 | ||
| Stainless steel | |||||||
| Base price | EUR/t | 1 161 | -2.0 | 1 185 | 1 304 | 1 470 | 1 174 |
| Alloy surcharge | EUR/t | 875 | -45.9 | 1 616 | 2 534 | 1 341 | 942 |
| Transaction price | EUR/t | 2 036 | -27.3 | 2 801 | 3 828 | 2 811 | 2 116 |
| Nickel | USD/t | 14 655 | -30.6 | 21 111 | 37 230 | 24 254 | 14 744 |
| EUR/t | 10 507 | -26.8 | 14 353 | 27 161 | 19 317 | 11 851 | |
| Ferrochrome (Cr-content) | USD/lb | 0.85 | -51.7 | 1.76 | 0.91 | 0.72 | 0.74 |
| EUR/kg | 1.34 | -49.0 | 2.63 | 1.46 | 1.26 | 1.32 | |
| Molybdenum | USD/lb | 11.42 | -61.4 | 29.56 | 30.57 | 25.10 | 32.51 |
| EUR/kg | 18.05 | -59.3 | 44.31 | 49.17 | 44.08 | 57.61 | |
| Recycled steel | USD/t | 223 | -44.4 | 401 | 280 | 230 | 204 |
| EUR/t | 160 | -41.4 | 273 | 204 | 183 | 164 |