MEPS estimates that world production rose by double digits year-on-year in 2021. The growth was driven by expansion in Indonesia and India. Global growth is expected to reach 3 per cent by 2022. That would be equivalent to a record high of 58m tonnes.
Indonesia has established itself as the world's second largest producer of stainless steel by producing more than India in the first nine months of 2021. Indonesia is expected to invest further to increase capacity due to ample domestic supply. As a result, stainless steel production is expected to grow by more than 6 percent in 2022.
Stainless steel smelting activity in China decreased in the second half of 2021. This was due to production curbs imposed on domestic steelmakers. Nonetheless, output rose 1.6 per cent over the 12-month period. Investment in new capacity could bring total production from domestic mills to 31.5 million tonnes by 2022.
India's supply surpassed pre-pandemic levels in 2021. Major government incentives in renewable energy and infrastructure this year should support stainless steel consumption. As a result, the country's steel mills are expected to produce 4.25 million tonnes in 2022.
In Europe, stainless steel production in the third quarter was lower than previously expected. While major domestic mills reported an improvement in shipments, total 2021 production had been revised down to less than 6.9 million tonnes in the fourth quarter. However, production is expected to continue to recover in 2022. The supply cannot meet the current market demand.
Global geopolitical events in Europe pose significant downside risks to the forecast. Countries involved in military action could be subject to international sanctions. This could therefore disrupt the supply of nickel, an important raw material for austenite grades. Moreover, in the medium term, financial restrictions may inhibit investment and the ability of market participants to trade.
