In the fourth quarter of 2002 stainless steel melted output growth is estimated to have increased by 6.2 percent year-on-year, thereby falling short of our previous expectations. This decline in the rate of growth can be attributed predominantly to the fact that various mills in Western Europe reduced their output and extended their usual holiday and maintenance shutdown periods during the fourth quarter. In addition to this, with the restocking recovery all but over and stocks now balanced, the economic outlook in each region will play a significant part in determining the demand for stainless steel throughout 2003. As a result of the slow growth in the main economies in late Q3 and Q4 2002, we expect that stainless melted production will increase by only 2.8 percent year-on-year in the first quarter of 2003. However, despite this forecast, we expect that the market will not deteriorate throughout the year. In the USA, apparent consumption data shows that the recovery is continuing, albeit at a rate which matches the deterioration in overall market sentiment. The automobile and housing sectors continue to perform well, supporting demand for ferritic sheet and appliance shipments respectively. In addition, stainless suppliers are hopeful that reduced inventory levels and a weaker US dollar will be supportive of new orders.
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