Apparent consumption figures for the stainless steel industry for the calendar year 2008 have been released. They show that despite a good start to the year, the final few months proved difficult and the industry took a knock.

“The South African stainless steel industry has experienced a volatile year, not unlike global steel markets,” says Sampie van Rooyen, the chairman of Sassda. “We saw a very buoyant South African market for the first six months of the year. However, when global markets collapsed during August/September 2008, we experienced global as well as South African steel markets reversing from buoyancy to total collapse.”

Figures show that apparent consumption was recorded at 185 647 tons, down 5.8% from the previous year. This is on the back of reduced primary local supply, which was down 2.83% at 132 448 tons, and reduced finished product imports, which were down 45.42% at 10 846 tons. However, primary imports bucked the negative sentiment to finish 3.55% higher at 42 353 tons.

“Apparent consumption takes into consideration all consumption, including stocking before the crisis. Demand for steel disappeared with stock levels being very high,” says Van Rooyen. “The figures are therefore skewed by what the stockist had already bought and this will be reflected in 2009 figures.”

Finished product imports dropped the most significantly, falling 45.42% whereas consumption only slowed 5.8%, showing that consumers and end-users favour local product first. “The finished product imports figure is the most accurate reflection of the market we can go on,” according to Sassda managing director Tim Raaff.

Local market demand was up, most probably also due to forward stock buying, at 118 741 tons, despite exports slowing to 66 906 tons.

“Personally, I think we have seen the bottom of this slowdown,” says Van Rooyen. “We just have to bide our time now. Things changed so fast. Everyone who has survived the past couple of months has probably gained more experience than they had in the past 20 years.”

Despite the hit that the industry has taken with the world-wide financial crisis, projected future global demand for stainless steel, according to the International Stainless Steel Forum (ISSF), shows that total demand should grow steadily during 2008 and 2009. However, this is mainly due to demand for hot rolled flat products. Cold rolled flat products and long products are expected to dip, recovering in 2010.

Other good news for stainless steel is the current bottoming out of the nickel price. Nickel rose to a high of $53 000 per ton in 2007 from about $17 000 in 2006, severely affecting the price of stainless steel. It has subsequently turned full circle, falling below $9 000 and currently sitting at approximately $12 650 per ton. Nickel accounts for about 60% of the cost of austenitic stainless steel.

However, in other global news, it has been reported by research group Antaike that China’s primary nickel output will grow by 11% in 2009 to 230 000 tons and that Chinese stainless steel output is forecast to fall by 6% for the country. In Japan stainless steel prices are rebounding as demand returns to September 2008 levels before the financial crisis. And Acerinox reported at the end of May that it too would be increasing its prices on better demand.