Productivity Growth Too Fast Broke The Balance of The Stainless Steel Supply and Demand

1. Productivity growth too fast and disorderly competition serious broke the balance of the stainless steel supply and demand. From 2006 to 2010, China stainless steel industry develop rapidly, it keep the world's largest stainless steel consumption and production. Chinese stainless steel production average growth rate has 20.7% in last 5 years, but the average growth rate of consumption was only 11.9%, there has serious domestic supply and demand imbalances. Meanwhile, international economic downturn led to stainless steel markets shrinking and stainless steel anti-dumping make stainless steel pipe export hard, which further exacerbating the stainless steel industry pessimistic. 2. Stainless steel industry concentration is not high. Bargaining negotiation ability is poor in material purchasing. China's stainless steel industry concentration is low. According to incomplete statistics, there are 500 stainless steel manufacturers in China and this number continues to grow. Europe ThyssenKrupp, Arcelor Reno Fox, Outokumpu and Arcelor Mittal's stainless steel production account for 35% of the worlds. Compared with foreign stainless steel manufacturers, our industrial concentration is very low. Compared with iron ore, nickel, chromium production enterprise, our concentration is large, it lead to our bargaining negotiation ability with materials supplier is poor. 3. Great stainless steel productivity makes materials shortage. China's nickel, chromium resources are relatively scarce, it rely on imports. With the rapid expansion of production capacity, China have transform from stainless steel importer to stainless steel raw materials importer. It is constraint by world market and the problem of lack of raw materials and price may occur at any time. 4. Energy consumption is higher than international standard. Metal recycling rates of domestic blast furnace is about 80%, the electric furnace is about 90%, the recycling rate is lower than international standard which use rotary kiln electric furnace. Domestic electric power consumption per unit is 450-500 kwh. The international power consumption in the 300-350 kwh. Most of the foreign electric furnace is fully closed, so it is energy saving and environment protection. China stainless steel industry has high energy consumption and low efficiency. It is an invisible problem in China stainless steel developing. Source: al-metal.org