By FN Arena

With exceptionally strong stainless steel demand from the EU and a pick-up in activity from China , steel industry consultants MEPS expect production to rise by 7.4% in 2006 to 26.25 million tonnes.

Some new Chinese capacity is already up and running, MEPS says, and they expect many of the 2005 installations to show improved utilisation rates over the coming 12 month period.

Of the 1.85 million tonne increase, around 500,000 extra tonnes are expected to come from Russia and China , increasing their production to around 4 million tonnes this year, while the EU is predicted to produce an extra 725,000 tonnes.