UK based MEPS said that "US stainless steel consumption dropped by 12.5% YoY in second quarter and may have dropped even more when April to June quarter data is tabulated. In fact, global demand growth for stainless steel mill products slowed so much in the second quarter that there now is world oversupply, according to a market review by Finnish stainless steel producer Outokumpu, which produces stainless steel at plants in Finland, the United Kingdom and the US."

It added that global production of stainless steel in the second quarter increased by around 2% from the first quarter despite hefty production cuts in Asia, especially in China. Also, uncertainty about the global economic situation has affected buyer behavior and softened demand.

MEPS said that "Stainless steel prices have stabilized and are falling slightly in North America as distributors are delaying purchases during summer holiday period and are hoping that declining nickel prices will drive stainless lower. Bloomberg news service adds that buyers of the alloy, used in buildings because of its resistance to corrosion, also have reduced purchases as global construction slows in the face of the credit crunch."

MEPS said that "Demand is traditionally weak at this time of year, especially in Europe, as the stainless steel industry’s major customers close down for their summer holidays. This year, that traditional dip in consumption has been magnified by such external influences as the collapse in US construction, which reduced demand for furniture, kitchens and white goods and slowing motor vehicle manufacture in North America and Europe."

MEPS also said that “The current high price of stainless steel has slowed the growth in its consumption in emerging economies like India and China. The threat from substitution by other materials is greatest in these countries. All of these factors may undermine conventional projections of expanding global stainless use.”

It further added that “Underlying demand for stainless steel from most end-use segments is stable at a low level, As a result of the increasing uncertainty related to the global economic turmoil some weakness is evident in consumer-driven segments such as white goods and construction. Demand from investment-driven segments continues generally healthy but some projects have been postponed because of the economic uncertainties.”