Global cold rolled stainless steel production is estimated to have fallen by -12% on-year in the first half of 2020, with every country experiencing a decline in output.
Average utilisation rate is estimated to have decreased from 76% to 63%, with a resulting increase of 2.8 million tonnes in overcapacity. Due to the stainless consumption drop in all major regions resulting from Covid-19 and demand weakness, coupled with new capacity in China and Indonesia, global utilisation rates should remain in this range in 2020, says French stainless producer Aperam.
Utilisation is expected to remain relatively low until at least 2022, assuming China does not address its overcapacity issue and there is no recovery in global demand. European producers are expected to remain under pressure as imports remain at a high level in a contracting market. Moreover, further capacity is coming online in 2020, in particular from Indonesia, Aperam says.
All Aperam’s non-essential and discretionary expenses have been frozen while capital expenditures have been reviewed down to reach about €100 million ($117m) in 2020. Half of this amount is for the new cold rolling and annealing and pickling lines in Genk, Kallanish notes.
Aperam started well into the year 2020 with a first quarter marked by a seasonal volume recovery and the exhaustion of some import quotas increasing demand for domestically-produced material. Prices remained flat. Towards the end of Q1 the company started to face significant Covid-19-related effects which continued over Q2.
Ebitda was €70m in Q1 and €49m in Q2. In H1 it was €119m versus €176m in H1 2019. Total sales in H1 stood at €1,867m compared to €2,268m in H1 2019. Steel shipments stood at 814,000t compared to 966,000t in H1 2019. Average selling prices were at €2,231/tonne compared to €2,272/t in the same period the previous year.
