CMC Poland anticipates healthy sales volumes driven by growing demand from construction and industrial end-use markets, while margins should grow sequentially following price hikes in the February quarter, says US parent CMC.
CMC Poland’s deliveries declined 7% on-year in the second fiscal quarter through February to 353,000 short tons. Merchant and other products shipments rose 17% to 275,000st, but rebar sales slumped 46% to 78,000st, Kallanish notes.
Demand from construction and industrial end markets remained healthy, but deliveries declined due to the high base effect, as the previous year’s quarter saw “unusually high volumes” being shipped, CMS says. The reduction in rebar shipments from a year ago reflects a shift in product mix to capitalise on market conditions, rather than any softening of market conditions, it adds.
Average sales price surged to $532/short ton versus $449/st a year earlier, but cost of ferrous scrap utilised also grew to $328/st from $251/st. This meant metal margin was $204/st versus $198/st a year earlier.
February-quarter net sales rose 12% on-year to $202.1 million, while adjusted Ebitda grew 20% to $16.1m. Profitability improved thanks to the expansion in margin over scrap, as well as the impact of selling lower-cost inventory amid rising steel prices.
In the six months through February CMC Poland’s shipments thus grew 4% on-year to 750,000st. Net sales grew 15% to $396.7m, with adjusted Ebitda up 23% to $30.6m.
The Polish mill currently produces up to 1.3 million st/year of rebar, wire rod and merchant bar. The firm plans to add by August 200,000 st/year of long steel production capacity and absorb excess melting capacity.
Adam Smith Germany