Stainless steel producer Outokumpu delivered 603,000 mt of stainless steel in the second quarter, down 3.7% quarter on quarter, the company said Aug. 4.
The Nasdaq Helsinki-listed company, the largest stainless steel producer in Europe, also said stainless steel deliveries in the first half of the year rose 1.3% year on year to 1.25 million mt.
IN a results statement released Aug. 4, the company said Q2 ferrochrome production fell 2.3% year on year to 128,000 mt, while output for the six-month period dropped 1.9% year on year to 257,000 mt.
Outokumpu’s Q2 sales rose 58% year on year to Eur2.951 billion ($3.016 billion), the company said, adding that realized prices for stainless steel increased significantly in both Europe and the Americas, while higher ferrochrome sales price boosted profitability.
The company said variable costs in the second quarter rose sharply year on year due to increased cost inflation in energy and consumable prices, while fixed costs also increased and slightly dampened profitability.
Market development
Outokumpu said global apparent consumption of stainless steel flat products in the second quarter rose 1.2% quarter on quarter, due to high seasonal demand in the Americas, which rose by 6.5%, while demand in the Asia-Pacific region increased 1.6% after the Lunar New Year-related drop in the first quarter.
The company said apparent consumption across Europe, the Middle East and Africa in the second quarter fell 2.8% quarter on quarter, showing more hesitant buying behavior, due to uncertainties related to inflation and the war in Ukraine.
Looking ahead to the third quarter, global apparent consumption of stainless steel flat products will likely increase 5.9% quarter on quarter, with the Asia-Pacific region driving the strongest growth of 10.6% for the period due to the recovery of Chinese domestic demand, while the Americas are expected to see a quarterly drop of 1.3% and EMEA a 11.7% drop, Outokumpu said, citing UK consultancy CRU.
In a year-on-year comparison, apparent Q3 demand is expected to increase by 8.5%, driven by 10.6% and 6.0% higher apparent consumption in the Asia-Pacific region and the Americas, respectively, while EMEA demand is expected to fall 1.1%, it said.
Outlook
Outokumpu’s stainless steel deliveries in the third quarter are expected to fall by 10%-20% quarter on quarter, the company said.
Prices for stainless steel have remained high for orders already received, while the European ferrochrome benchmark price fell to $1.80/lb for the third quarter, Outokumpu said.
The company said energy costs are expected to increase in the third quarter and hurt the ferrochrome business area in particular, while planned maintenance costs in the third quarter are expected to increase by about Eur10 million quarter on quarter.
Outokumpu said that with current raw material prices, significant raw material-related inventory and metal derivative losses are expected to be realized in the third quarter.
“The war in Ukraine has led to an energy crisis, with increased energy prices and uncertain availability for next winter. Yet, the realized impacts of the uncertain situation on stainless steel demand or economic growth are difficult to estimate,” Outokumpu CEO Heikki Malinen said in a statement.
“We are living in exceptionally uncertain times both politically and economically.”
— Filip Warwick
