Stainless steel producers in Europe have announced several cutbacks and shutdowns at operations, citing high energy prices as the major challenge.

The EU accounts for less than 13% of global stainless steel output since 2020, a market share that has dropped from over 30% in the mid-2000s. The drop reflects the rapid growth in stainless steel production in China over the last two decades: China now accounts for over 50% of global output.

The EU is facing a rising energy crisis leading into Q4 2022 and the northern hemisphere winter. Soaring energy prices (particularly acute in Europe because of the war in Ukraine) are making energy-intensive industries such as electric arc furnace (EAF) smelting unsustainable against a backdrop of weak demand and a weak macro environment. 

At the same time, China’s stainless steel industry is forging ahead and will maintain its dominance through further investments including a 7Mtpy capacity industrial park in Ningde, Fujian Province. Continued growth in stainless steel underpins a positive outlook for chromium and nickel alloy markets, as well as other more niche alloys. The focus of growth in China will continue to underpin international chromium and nickel supply chains to meet domestic requirements. While the medium-term outlook is positive, the short-term economic outlook remains bleak and Project Blue is not expecting demand in China to recover significantly before the 2023 China New Year.

Back in the EU, Outokumpu still indicates that it can operate normally with the ability to switch stainless steel output between mills based on regional energy restrictions. The company is the only integrated chromite-ferrochrome-stainless steel producer in the EU.