The Stainless Monthly Metals Index (MMI) increased by 5.3% for this month’s index value, as this month we touch on Chinese stainless production, South Africa’s proposed chrome export tax and more.
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Chinese stainless steel market
The Stainless Steel Council of China Special Steel Enterprises Association anticipated domestic stainless steel production to increase by 2.1% at the end of 2020. The increase would bring total output to more than 30 million metric tons.
High demand incentivized production. Apparent stainless steel demand for 2020 is expected to rise by 6.4% to 25.5 million metric tons.
Besides producing stainless steel, China also imports significant quantities.
Most stainless steel imports come from Chinese mills in Indonesia such as Tsingshan Holding Group. China imported 1.1 million metric tons of stainless steel in the first three quarters of the year, a 24.3% increase compared to 2019.
Furthermore, China exported 2.37 million metric tons during the same period, a 12.4% decline from 2019.
South Africa chrome export tax
The world’s largest chrome producer, South Africa, proposed an export tax on chrome ore.
The export tax could have a significant impact for China, as 83% of its chrome ore imports came from South Africa in 2019.
The chrome export tax aims to incentivize the production of ferrochrome in South Africa. However, building or expanding chrome smelter capacity in South Africa could be challenging in the country, as smelters are highly power intensive.
The country already battles with unreliable electricity supply, which makes production more costly.
If South Africa approves the chrome export tax, stainless steel prices could go up as production costs rise.
The chrome export tax is not likely to impact stainless steel prices in 2020. However, the tax may have an impact on the first quarter of 2021.