Improved end-use demand and previous cuts in capacity will support increased stainless steel production in Europe in 2015. However, any price advancement will likely be curtailed by high volumes of imports from China and Taiwan, according to Moody’s.

Slow but continued economic growth in most of the euro area and the consequent boost in consumer confidence will fuel modest growth in Europe’s stainless steel market. In Europe, the Middle East and Africa (EMEA) demand will be supported by the automotive, transportation, construction and infrastructure industries, as well as further penetration into the consumer goods and medical equipment sectors. The latter two consume 45% of stainless steel finished products.

“We expect that European capacity utilisation will continue to improve in the next 12-18 months, sustained by higher demand and improved volumes output,” Moody’s says in a report sent to Kallanish. “Based on the current level of activity and European stainless steel slab demand, capacity utilisation is around 75%.” This will grow towards 80% throughout 2015.

European stainless producers have also begun to benefit from previous years’ restructuring measures. Outokumpu cut capacity by 6 million tonnes/year and confirmed it will close its Bochum melt plant in 2015, while ThyssenKrupp Stainless has restructuring initiatives planned.

Nickel prices have soared 35% since January after Indonesia banned unprocessed nickel exports. This accelerated the restocking effect from market players trying to anticipate further price increases. Moody’s sees this situation continuing in 2015.

This, coupled with improved stainless demand, has seen the base price of 2mm thick cold rolled 304 stainless steel coils increase this year. “If demand continues to improve and utilisation rates remain higher, we expect larger European producers such as Outokumpu, Aperam and Acerinox will be able to increase their base price in the coming 12 months,” Moody’s observes.

Any price increase will, however, be restricted by increased competition from Asia-origin imports. “We do not expect a material slowdown in imports in the fourth quarter,” says Moody’s, adding however that the Indonesian ban has eroded much of the Chinese price/cost advantage. European stainless producers could also benefit from anti-dumping proceedings against Chinese and Taiwanese product.