The global slowdown in stainless steel demand triggered fourth quarter cutbacks in nickel-based steelmaking in Europe, China and South Korea. Data from the International Stainless Steel Forum (ISSF) shows that stainless steel production in the first three quarters of 2007 of 20.9 million metric tons was just 0.4% higher (at 90,000 metric tons) than in the first nine months of 2006

Posco, the world's fourth-largest steelmaker, started in early December to reduce monthly stainless steel output by 20%, responding to slowing demand at home and in its large export markets. "Chinese and European stainless steel makers are also trimming output. We have no choice," a company official in Seoul told the Reuters News Service in December.

The monthly reduction in output coincided with a stainless steel price reduction by Posco putting 300-grade hot-rolled stainless steel products down to $3,669/ton. The price of 300-grade cold-rolled stainless steel will be cut to $3,960.

The price cuts came after customers accelerated delays in orders for stainless steel, anticipating that prices would fall further due to tumbling nickel prices. The drop in U.S. use through September was more than 12%. Global nickel prices dropped by 50% under $12/lb in December on the London Metal Exchange from a peak of $23.50 in May—as traders are growing worried about 2008 stainless steel demand, believing that world credit market problems are spreading to the broader economy.