China's Stainless Steel Output Surges in 2018 amid Domestic Demand Growth

According to the data released by CSSC (China Special Steel Enterprise Association), China's production of crude stainless steel totaled to 26.71 MnT in 2018, up 3.62% against 25.77 MnT in 2017.

However, the rise in China's apparent stainless steel consumption was higher as compared to its growth in output as the same stood at 21.3 MnT recording a jump of 7% or 1.39 MnT against the previous year of 2017.

With the production total, growth in output of chromium 400 series was highest at 7% from 399,000 tonnes to 5.47 MnT.

With the production total, the output of the chromium-manganese 200 series stainless steel climbed from 375,300 tonnes in 2017 to 8.26 MnT in 2018. Production of the chromium-nickel 300 series rose from 100,000 tonnes to 12.82 MnT and the chromium 400 series output surged from 399,000 tonnes to 5.47 MnT in 2018. Production of duplex stainless steel rose from 58,701 tonnes in 2017 to 160,660 tonnes.

Growth in output due boost in domestic demand

The increase in China's stainless steel output is attributed to demand growth in the country. Although China's stainless steel consumption numbers are not yet out, China Ferroalloys Industry Association (CFIA) had forecasted that country's domestic stainless steel consumption would surge by about 6.4% from 19.86 MnT in 2017 to 21.13 MnT in 2018.

China's per capita stainless steel consumption has been increased from 1.4kgs in 2000 to around 14.35 kgs at present.

Government efforts to boost infrastructure - such as the "One Belt, One Road" initiative - and increased consumer spending power has given the boost to China's stainless steel demand and is also expected to maintain the growth rate in Chinese consumption of stainless steel over the coming years.

The key obstacle to China's stainless steel exports

China has been the world's largest producer of stainless steel since 2006, accounting for around 54% of production worldwide currently, up from just 13% in 2005.

However, according to industry experts, tariffs imposed by the European Union and the United States have removed its competitive advantage in the export market.

In March 2018, the European Commission extended existing anti-dumping duties - ranging from 48.3% to 71.9% and that was initially imposed in 2011 - on Chinese imports of seamless pipes and tubes of stainless steel for another five years, for example. The EC now has 53 measures in place on steel and iron products, including 27 on products from China, it said in March when extending the duties on stainless tube and pipe.

Measures such as these have increased the Chinese stainless steel's reliance on domestic demand and the increase in domestic demand helped the country to ease the oversupply in China's stainless steel sector.