The latest news regarding the drivers of the stainless steel industry reveals an astonishing new trend. Instead of investment goods trailblazing the industry, it is now consumer goods that has taken over. The latest studies show that 55% of the market is carried by consumer durables while 45% are sold as investment goods.
In Europe, overproduction of stainless steel was at 3 million tons three years ago. In 2011, it improved to 2.7 million tons. Last year, the unused stainless steel levels improved but only by a very small margin which would explain why steel companies in Europe have been merging or decreasing their production outputs.
Some of the recent decisions made by European steel companies are to remove night shifts and weekend overtime work, lay off workers by as much as 150 employees, and sell out to the highest bidder.
In Asia though, the stainless steel industries are either stable or growing. China though has an overcapacity of more than 6 million tons but they¡¯re not worried. They believe that the buyers will go to them because of their lower prices. They also are planning more infrastructures in the country and elsewhere as their investments continue to increase. In the case of China, Vietnam, and India, their stainless steel consumer goods are produced at lower costs and can compete aggressively with the European market especially now that they have improved their technology.
In addition, it has been always the case that consumer goods are price sensitive more so given the global economy. However, there are alternatives to stainless steel consumer durables such as coated carbon, plastic, and aluminum while stainless steel investment goods are generally less volatile and unchallenged.
Consumer durables are categorized as appliances, catering equipment, lifestyle products, and tableware. Industrial investment in stainless steel are investments in petrochemical, chemical, food processing, water treatment, pharmaceuticals, manufacturing, fittings and flanges. They also include equipment for oil and gas, construction, and transportation.
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