Global stainless steel producers expect crude steel output to recover this year thanks to growing industrial consumption, but a sharp increase in input costs poses a possible danger to demand.

The International Stainless Steel Forum (ISSF) industry association said on Monday it forecast production will rise by 6.0 percent to 29.32 million tonnes this year, powered mainly by Asian stainless steel makers.

"At the current time ISSF does not see a big risk to stainless steel demand from underlying basic developments in the stainless-steel fabricating industries," it said.

"However, a substantial risk is seen in rising raw material prices for iron, chrome and manganese."

Global production last year fell despite underlying demand rising by more than 8 percent thanks to a rise in industrial production growth.

"Based on massive and never before seen stock draws after a crash of nickel prices in May 2007, global stainless crude steel production decreased by 2.6 percent for the full year," it said, citing data that showed double-digit percentage declines in Western Europe/Africa and the Americas.

The figure of 27.7 million tonnes produced last year included a stock draw of more than one million tonnes, according to the ISSF.

By region, the ISSF expects Asian output to rise 7.3 percent to 17.2 million tonnes, with 4.4 percent growth in Western Europe/Africa to 9.05 million and another 3.7 percent or 2.70 million coming from the Americas in 2008.

ThyssenKrupp and Arcelor Mittal are the two largest global stainless steel producers, while in Europe Spain's Acerinox and Outokumpu of Finland specialise in stainless steel.

Each company has one representative on the ISSF Executive Committee, as does Posco, Jindal Stainless, Nisshin Steel and Taiyuan Iron and Steel, parent of China's Taigang Stainless Steel.

By 1349 GMT, the DJ Stoxx European basic resources index traded up 1.5 percent, one of the better performing sectors along with tech, utility and healthcare.