Singapore 28/01/2016 - China's crude stainless steel production fell 0.6 percent to 21.56 million tonnes, according to data published by the Stainless Steel Council of China Special Steel Enterprises Association (SSC) on Thursday.
Output of 300-series stainless steel - containing usually at least eight percent nickel - rose 3.7 percent year-on-year 11.27 million tonnes last year.
The increase was, however, offset by a decline in the production of low-nickel 200-series stainless steel and non-nickel-containing 400-series stainless steel.
The output of 200-series fell 0.7 percent to 6.33 million tonnes while production of400-series dropped 10.9 percent to 3.97 million tonnes in 2015.
Chinese apparent consumption of stainless edged 1.4 percent higher to 16.28 million tonnes last year. Exports fell 11.3 percent to 3.42 million tonnes while imports dipped 11.9 percent to 726,000 tonnes in 2015.
Analysts largely expected China's stainless steel production to register flat growth or move into contraction last year amid weak demand and sliding stainless steel prices.
In December, six major 200-series stainless steel producers said they would cut production by 30 percent from December onwards. But market participants said the impact of the cuts on nickel demand was expected to be limited because 200-series producers mainly use low-grade nickel pig iron (NPI) and 200-series stainless steel contains only 1-4 percent nickel.
Domestic stainless steel production and consumption are expected to decline this year due to "supply-side reforms" that will gradually eliminate capacities in the stainless steel industry, the China Nonferrous Metals Industry Association (CNMIA) predicted late last year.
Global nickel metal prices are likely to remain low in 2016 - the CNMIA sees the LME price averaging $8,000-12,000 per tonne this year due to the grim outlook for the Chinese stainless steel market, the association said.
China is the world's largest stainless steelmaker. The country's tapering production rate, lacklustre stainless steel demand globally and the huge nickel stockpile have largely been blamed for nickel price's poor performance since last year.
LME three-month nickel has fallen around 40 percent since May this year. It was last at $8,615 per tonne on Thursday, down $40 from Wednesday’s close.
The stainless steel industry is the largest user of nickel, accounting for 60-70 percent of consumption.
(Editing by Mark Shaw)