Singapore 05/05/2016 - China’s crude stainless steel production rose 6.45 percent year-on-year to 5.34 million tonnes in January-March, according to data published by the Stainless Steel Council of China Special Steel Enterprises Association (SSC) on Wednesday.
Output of 300-series stainless steel - a high nickel containing grade of usually at least eight percent nickel - increased 10.7 percent year-on-year to 2.97 million tonnes in the first quarter.
The increase was, however, partially offset by slight production growth for low nickel 200-series stainless steel and non-nickel containing 400-series stainless steel.
The output of 200-series stainless increased 1.9 percent to 1.33 million tonnes, while that for 400-series stainless rose 0.4 percent to 1.02 million tonnes in the first three months of the year.
In December, six major 200-series stainless steel producers had said they will 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 as 200-series producers mainly use low-grade nickel pig iron and 200-series stainless steel contains only 1-4 percent nickel.
China’s stainless steel production had contracted 0.6 percent to 21.56 million tonnes last year amid weak demand and sliding stainless steel prices.
Meanwhile Chinese stainless steel apparent consumption grew 4.4 percent to 3.95 million tonnes in the first quarter of this year.
Chinese stainless steel exports increased 12.4 percent to 895,900 tonnes, while imports dipped 12.3 percent to 152,600 tonnes in January-March.
China is the world's largest stainless steel producer. 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.
This year, the International Nickel Study Group sees world primary nickel usage increasing by around 3.8 percent to 1.962 million tonnes, after rising a slight 0.8 percent to 1.89 million tonnes in 2015.
Despite the challenging economic environment, world nickel usage is expected to grow in 2016 due to the increase in production of the austenitic stainless steel grades in all main markets, INSG said earlier in April.
The London Metal Exchange three-month nickel price has fallen by around 50 percent between May last year and February this year. It has inched higher since and was last at $9,275 per tonne on Thursday, down $170 from Wednesday’s close.
The stainless steel industry is the largest user of nickel, accounting for 60-70 percent of consumption.