China's stainless steel demand shows growth potential despite current challenges

Mysteel Global: Despite ongoing market difficulties, China's stainless steel sector showed significant promise for future demand growth, according to Lin Jun, an analyst with Ningbo Baoxin Stainless Steel. Speaking at the China Nickel-Chromium Stainless Steel Industry Chain Conference in Tianjin on 21 August, Lin highlighted that strategic initiatives and innovation will be crucial to unlocking this potential.

Ningbo Baoxin Stainless Steel, headquartered in Zhejiang, East China, is a subsidiary of China Baowu Steel Group, the largest steel producer globally. Lin pointed out that in 2023, China's per capita stainless steel consumption reached 22 kilograms, surpassing Japan's 13.9 kg and Germany's 16.6 kg. However, it still lags behind South Korea's 30.1 kg and Italy's 33.8 kg. This disparity suggests that there is substantial room for growth in China's stainless steel demand.

Lin forecasted a 6% increase in China's stainless steel demand for 2024, estimating it would rise to 32.95 million tonnes (mnt). He further projected that by 2028, demand could reach 41.2 mnt. Nevertheless, the first half of the year was challenging for China's stainless steel market, Lin admitted, with many producers struggling to maintain profitability. This struggle is attributed to heightened competition from a growing number of suppliers and rising raw material costs, which have dampened the benefits of increasing demand.

Additionally, Lin observed a trend where major end-use companies are increasingly purchasing directly from steel mills, bypassing the retail market. This shift has contributed to the sluggish performance of the stainless steel spot market. A representative from a large home appliance manufacturer noted that direct purchasing has advantages for major buyers. "Buying stainless products directly from steel mills helps us avoid spot market price fluctuations and ensures product quality meets our standards," she explained to Mysteel Global during the conference.

To address these challenges, Lin emphasised the need for innovation and closer collaboration with end-user industries. He cited Taiyuan Iron and Steel Group's development of new nickel-based alloys as an example of how high-quality domestic alternatives are being created for Chinese aircraft manufacturers.