CRU: Tsingshan Group - The World's Largest Stainless Steel Producer Just got Bigger

LONDON, September 7, 2017 /PRNewswire/ --

Tsingshan Group recently began shipping stainless slab from its newly-commissioned fully-integrated plant in Indonesia. In order to accommodate the ramp up in Indonesia, Tsingshan is reducing its stainless steel output at its Chinese plants by converting some of its mainland capacity to carbon steel production.

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These developments raise questions about both the company's strategy and the future interplay between Indonesian and Chinese stainless steel production. Tsingshan could have the capacity to produce almost 10 Mt/y of stainless steel before the end of 2019, which would make it capable of supplying almost 20% global demand. That scale, plus the ability to shift production between Indonesian and Chinese production bases depending on the relative strength of domestic Chinese and export markets for stainless steel, enhances Tsingshan's competitiveness.

Which plants are likely to switch to carbon steel?
Guangqing Metal Technology (Guangqing) began switching from stainless to carbon steel output back in June. The plant's No.2 meltshop-one of two 1mtpy facilities at the site-ceased making 200-series stainless steel and moved entirely to carbon steel production. By mid-August, some of Guangqing's No.1 meltshop capacity was switched from 300-series stainless to carbon steel production. This means that six of Guangqing's eight AOD furnaces are producing carbon steel-we expect the plant's stainless steel output to fall by around 30-40% m/m in August, before dropping lower still in September.

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