SHANGHAI, Jan. 14 (SMM) – According to SMM sources, China's stainless steel demand growth fell during the past three years, while NPI output growth continued to advance, which weighed down NPI prices. With regard to output in 2013, it is believed that the NPI industry will undergo industrial consolidation in 2013.

According to SMM statistics, China’s NPI output in 2012 totaled 360,000 mt, while purchases from stainless steel mills were around 340,000 mt, leaving 20,000 mt into inventories.

Growth in NPI output is 30%, higher than growth in stainless steel output. With regard to demand from stainless steel mills, NPI demand from stainless steel mills is growing and NPI consumption proportion also increases. It is expected that NPI consumption proportion at stainless steel mills will rise from 46.77% to 56% in 2013.

With regard to NPI price, stainless steel mills tried to beat down NPI procurement prices in 2012. After analysis, SMM believes the reasons behind low procurement prices from NPI producers are as follows.

1. Stainless steel prices were sluggish in 2012. Although stainless steel prices rebounded slightly in May and September, soft demand from end-users weighed down prices later.

2. The low prices of stainless steel forced producers to lower procurement prices of NPI.

3. The sluggish demand from end-users and decline in exports curbed output of stainless steel, restricting consumption of NPI. According to SMM sources, stainless steel utilization rate in 2012 was around 65%.

In 2011-2012, RKEF + rotary kiln technology greatly help reduce production costs at NPI producers, attracting many NPI producers to invest RKEF + rotary kiln technology. SMM expects that new output of stainless steel will be 1 million in 2013, and new output of NPI will be 90,000 mt.