Stainless steel prices have tumbled on weak demand. Averages for 2001 are likely to fall short of levels seen in 2000 and won't begin to improve until mid-2002. That's the outlook from Vanessa Davidson, research manager of specialty steels and alloys at CRU International in London, who says the present cycle of inventory de-stocking by end users and service centers will extend through most of this year, depressing any major chances for market price recovery.

"Although we believe there will be some recovery in consumption in the latter half of this year, and that prices will improve [in 2002] once excess supplies have been eradicated, the improvement is likely to prove temporary," Davidson says. She sees prices taking a strong downturn again in 2003, as around three million metric tons of new low-cost melting capacity starts up, especially in western Europe. "The large volume of new capacity due to come on stream in mid-2002 is expected to depress prices once again, and it is not until 2004 that we are forecasting sustained improvement."

One of the keys to world recovery in the stainless steel market is China, which accounts for 15% of global demand, but last year consumed 200,000 metric tons less than market forecasts. "The fall in Chinese buying was a major contributor to the surplus of supplies worldwide," Davidson says. Asian consumption as a whole is expected to dip again this year, she notes, but adds that "demand for stainless steel in China is believed to be rising."