Indonesia to displace India as world’s No 2 stainless steel producer

| | Updated on: Dec 06, 2021
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Despite increase in output, availability is expected to remain tight as the metal remains in short supply in many countries

The dynamics of the world stainless steel market are evolving rapidly. Production has been rising in recent years and the trend is expected to continue into 2022. Despite being the world’s largest producer by far, China’s production is seen constrained by State regulations; but elsewhere in the world production is set to rise.

As a result, in 2022, world stainless steel production is forecast to set a record of 58.2 million tonnes (mt) registering a growth of 2.5 per cent, according to UK-based research institute MEPS that specialises in steel market.


Despite increase in production, availability is expected to remain somewhat tight as the metal remains in short supply in many countries. If anything, demand continues to remain robust as countries in different geographies witness rebounding economic activity. This simply means that buyers have to prepare themselves for continued high prices or even an escalation.

The story gets interesting when the research institute says that Indonesia is set to displace India as the world’s second largest producer this year with stainless steel production of 4.5 mt.

In the current year 2021, global production is set to log 56.8 mt, showing a growth of 11.6 per cent from the previous year, according to the research agency.

The government in the Budget 2021-22 reduced the customs duty uniformly to 7.5 per cent on Semis, Flat and Long products of non-ally, alloy and stainless steels to alleviate domestic tightness. This is intended to benefit metal re-cyclers who are mostly small and medium enterprises.

The addition of nickel enhances the properties of stainless steel and makes it a versatile alloy. The metal is also used in high-performance wires and coins.


Tighter nickel market

With the double-digit surge in global stainless steel production, the nickel market is tightening, exacerbated by demand from the battery industry. Nickel producers expect that the current year will actually end in a supply deficit; but next year, the market will get into a state of surplus with more production coming in, especially from Indonesia.

The International Nickel Study Group anticipates a surplus of 76,000 tonnes for 2022. With the easing of power crunch in China, rising level of smelting activity is seen, according to market observers.

Since the beginning of the month, concerns over the spread of Omicron, the new variant of Coronavirus, have gained upper hand in the metals market. Uncertainty over the future trajectory of the new variant and its likely impact on economic activity is seen making market participants cautious.

From an Indian perspective, we are a net importer of nickel and products made of nickel. The value of import has been rising steadily in recent years and stands at about $800 million.

(The author is a policy commentator and commodities market specialist. Views are personal)

Published on December 06, 2021

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