The outdoor hot tub which was fabricated by Modulpool using Outokumpu’s grade Supra 316 plus

The prospects for stainless steel in 2016?

John Butterfield - 11 February 2016

In a recent article in Stainless Steel World magazine, James Chater talked about how the world economy seems to have hits the skids again in 2016. Prospects do not appear good with already some countries moving into recession whilst the effects of fiscal expansion are also wearing off. The situation is further complicated by over-production, which is affecting not only stainless steel producers but also some of the markets they serve. So where will the most viable markets be in the coming years

About the author

Mr John Butterfield
John Butterfield is Editorial Manager at KCI Publishing. A new field of interest for him is additive manufacturing.
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Markets

In this challenging situation, in which both producers and some markets are facing weak demand and are saddled with over-capacity, we cannot make hard-and-fast predictions about which markets will provide the greatest opportunities for stainless steel suppliers. However, by looking at a few sectors we can strive to read the tea leaves.

Oil and gas
It has been a miserable year for most oil and gas producers, with OPEC seemingly hell-bent on increasing production whatever the oil price does. Oil prices will one day head higher, but no one knows exactly when. Probably later rather than sooner, as Iran may be about to flood the oil market once sanctions are lifted. There have been cutbacks and lay-offs, and this will continue in the short term, although a major conflict in the Middle East (between Saudi Arabia and Iran, for instance), may lift the oil price and stimulate projects in more stable countries, especially North America. Projects are being postponed, but producers continue to pump from wells that are already producing, otherwise they will lose even more money. With so much over-production, storage space is at a premium. Much of the over-production (especially from Iran) is being stored on tankers, ready to more as soon as demand increases. If the glut continues, more storage capacity will be needed. The lower oil prices are also bullish for the refining and petrochemical industries, which pay less for their feedstock. This is especially true of the USA, but also of Europe, where CEFIC has predicted a rise in chemicals output of 1% in 2014, beating the 0.5% rise in 2014.

Power generation
The most spectacular changes that are taking place at the moment are in solar power, where costs are plunging even as innovation is producing efficiency gains. In many parts of the world, solar has achieved grid parity with other power generation sources. Moreover, the technology continues to advance rapidly. After the global warming talks in Paris last year, the commitment to reduce global warming could accelerate the phasing out of coal and the deployment of solar. Concentrated solar power will require austenitic piping, while solar water tanks consume a lot of heat-resistant ferritic grades.

Food and drink
Growth in this market is buoyant in some regions. The UK market is expected to grow 3-4% over the next few years (4). But the market is fragmented, with niche markets and health products on the rise, and constantly changing fashions and fads mean manufacturers have to stay on their toes. The big news this year is that legislative steps are being taken to reduce food waste. An example was set by the French government, where supermarkets are now legally obliged to give away or recycle their food waste rather than throwing it away. Other countries will follow suit, and some supermarkets have started their own initiatives. Rotting food causes release of methane gas and therefore adds to global warming. Legislation designed to promote recycling of food could lead to a rise in waste-to-power generation, biofertiliser, combined heat and power and district heating projects. The anaerobic digestion process used in making biofuels is a major consumer of stainless steel.

Want to read more? The full article and other interesting commentaries about the stainless steel industry can be found in: Stainless Steel World magazine January/February 2016, p. 26–31.

Photo: This outdoor hot tub needs to withstand the harsh Nordic climate. It was fabricated by Modulpool using Outokumpu’s grade Supra 316 plus.

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