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“[Chinese] capacity increases are running ahead of demand, creating growing global oversupply,” Pariser said at the Bureau of International Recycling (BIR) conference in Warsaw, Poland, on Tuesday October 29.
Chinese stainless steel production will rise by 14% year-on-year in 2013 to 18.6 million tonnes, compared with a fall of 5% in Europe to 7 million tonnes, Pariser forecast.
“The China bubble is an interesting theory,” a European stainless scrap handler told Steel First on the sidelines of the conference. “It’s going to have an effect. [Is China] going to use [surplus stainless scrap] internally, or export it?”
Looking to the short term, European stainless steel mill demand for scrap “should improve in the first quarter of 2014”, the scrap handler said.
This has prompted increased buying of stainless steel scrap among handlers of the material.
“We need to get material in position in our yards,” he added.
The price of 18/8 stainless steel scrap delivered to continental Europe has risen in recent weeks, to €1,000-1,020 ($1,380-1,408) per tonne on October 25, compared with €950-970 ($1,311-1,339) per tonne on October 4.
Chinese overcapacity for stainless steel production is risking a stainless steel scrap bubble in five to ten years’ time, according to Heinz Pariser from Alloy Metals & Steel Market Research.