German steel and metal distributor Kloeckner expects to report higher sales for 2018 due to higher average price levels, the company said Wednesday.
Amid growing protectionism, steel prices generally have been on an upward trend since last year: Hot-rolled coil North Europe prices rose from a Q3 2017 average of $516.65/mt to $565.87/mt in Q3 2018.
This trend has been reflected in Kloeckner’s average revenue, which was $1,155/mt in Q3 2018, based on steel and metals shipments, compared with $1,017/mt in Q3 2017. In this period 81% of Kloeckner’s revenue came from steel products.
In its Q3 2018 earnings report, the company said real steel demand in Europe is expected to increase by 1-2% over the remainder of 2018. Shipbuilding is expected to be the most promising sector followed mechanical engineering and construction, the earnings report said.
The US outlook pointed to even stronger growth of 2-3%. The construction, mechanical engineering and energy industries are all expected to see positive developments. However the automotive and shipbuilding sectors are expected to remain stable.
The distributor’s European shipments have been down year on year across all quarters in 2018. Q3 saw a year-on-year decrease of 7.7% in tonnage shipped with 827,000 mt moving relative to 896,000 mt in 2017. Q1 and Q2 both experienced reduced volumes, but to a lesser extent, down only 2.7% and 2.9% respectively.
Despite the downturn in tonnage shipped, Kloeckner has seen a year-on-year increase in European sales figures across all elapsed quarters. Q3 2018 European sales amounted to Eur1.014 billion, an increase of 1.5% on the same period a year prior.
In the US, Q3 shipments increased by 7.7% year on year to 692,000 mt in 2018. In line with the trend thus far of increased shipments across all quarters in 2018.
Along with the increased shipments, US sales figures also gained year on year in Q3. US sales figures increased 30.7% on year to Eur740 million in Q3 2018.
Europe remained Kloeckner’s core market in Q3 with business in Germany and Austria accounting for 30% of sales, Switzerland for 15%, France and Belgium for 10%, the UK for 4% and the Netherlands for 3%. US business accounted for 37%.
Emmanuel Latham, S&P Global PLATTS
