A combination of improving economic data and government-sponsored investment could bolster Polish long steel demand in the quarters ahead, says CMC. Regional mills’ production cutbacks helped its Polish unit raise selling prices and improve profitability versus the previous two quarters. However, on-year results were down dramatically.
CMC Poland saw steel shipments plummet 37% on-year in the second fiscal quarter through February 2024 to 275,000 short tons. Merchant bar and other product sales fell 17% to 211,000st, while rebar was down a hefty 65% to only 64,000st.
“Conditions in Europe are expected to remain challenging, but adjusted Ebitda is anticipated to approach breakeven levels during the third quarter,” CMC president Peter Matt says in a note seen by Kallanish.
“Business conditions for our Europe Steel Group are slowly improving, and should further benefit from increased residential construction activity as a government programme aimed at first-time homebuyers, and other government sponsored investment programs, begin to impact steel demand,” he adds.
CMC Poland average sales price was down 11% on-year in the February quarter to $673/short ton, with cost of ferrous scrap utilised up 1% to $394/st, resulting in a steel products metal margin of $279/st, down 24% on-year.
Net sales dropped 43% to $192.5 million and the firm slipped to an adjusted Ebitda loss of $8.6m versus positive $11.5m a year earlier.
Although Ebitda in the November-2023 quarter was positive $38.9m, this was thanks only to a $66m energy rebate.
Europe market conditions improved during the February quarter in comparison to recent quarters, but long steel consumption remained below historical levels. Regional long steel producers “took significant actions to rationalise supply”, while inventories across the supply chain were reduced, CMC concludes.
Six-month-through-February sales were down 32% on-year to 618,000st, with net sales down 42% to $417.7m and adjusted Ebitda down 59% to $30.3m.
Adam Smith Poland
