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PrintTokyo (Platts)--Japan's production of chrome-nickel-molybdenum stainless steel, more commonly known as SUS316 stainless steel, is likely to fall in November, which will hit molybdenum demand, local market sources said Thursday.
"Stainless steel makers are thinking of cutting output by roughly 10% from this month, to see how the market reacts, and may re-adjust their operating rates next month," said one source close to an integrated steel maker.
Some steel makers feeling the domestic market has excess supply of SUS316 may cut output more, suggested another source.
SUS316 products are used for infrastructure projects, typically for manufacturing plant pipes. The products are either delivered to end-users or to retailers, and orders from the retailers have sunk, according to a stainless steel maker source.
According to government data, Japan produced 27,004 mt of SUS316 equivalent stainless steel in July and 24,113 mt in August.
Production fell in August as plants closed in mid-August for holidays.
Production for September and October production is likely to be between the July and August figures, but a drastic fall is expected starting November, sources said.
The current consumption of molybdenum products for SUS316 production is roughly 500 mt/month. The steel contains around 2% molybdenum.
Some sources also said the production of chrome-molybdenum stainless steel, commonly known as SUS434 and 444, would fall by roughly 10% as well, as stainless steel output cuts could involve all steel types regardless of their respective demand. Its output was 17,684 mt in July and 20,754 mt in August, consuming roughly 400 mt/month of molybdenum.
The moly consumption for molybdenum-chrome specialty steel, used mainly for automobiles, may also fall, but consumption for machine tools and catalysts appears to be safe so far, one Tokyo trader said.
Japan consumes roughly 4,000 mt/month of molybdenum products.
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