LONDON, June 7 -- World stainless-steel production will increase by at least 25 percent this year because of demand from China, according to the Bureau of International Recycling.

Output will increase to more than 30 million metric tons, from 24 million tons last year, according to forecasts from recyclers supplying stainless-steel scrap, said Michael Wright, president of the Brussels-based BIR's Stainless and Alloy Board. The forecast in February was 28 million tons, he said. Output may expand to 32 million tons next year, Wright said.

"Production has come back much faster than anticipated," Wright, who is also chief operating officer of Sheffield, England-based stainless-steel recycler ELG Haniel Group GmbH, said in an interview in London yesterday.

Stainless-steel output slumped more than 5 percent to 24.6 million tons last year, after dropping almost 7 percent in 2008, according to the Brussels-based International Stainless Steel Forum. Production jumped 55 percent in the first quarter as the global economy rebounded, spurring demand for everything from houses to cars, ISSF estimates show.

Steel mills may reduce inventories in the third quarter, usually the weakest period in the year as people go on vacation, Wright said.

"We are having a lot of mills telling us that their order intake has dropped," he said. "The fourth quarter I'm more optimistic and I think there is a good possibility that demand will return."