SSAB is hopeful demand could improve in global markets towards the end of the third quarter. This comes after the coronavirus emergency and seasonal slowdown registered during summer further impact performance.
“Third-quarter demand for steel is expected to be negatively affected by industrial deceleration due to the effects of Covid-19,” SSAB says in its Q2 earnings report seen by Kallanish. “In Europe in particular, but also to some extent in North America, this effect is expected to be intensified by normal seasonal slowdown. Underlying demand is expected to improve somewhat toward the end of the third quarter.”
While demand for high-strength steels is expected to be hit less than other sectors, in the Americas the group expects shipments to remain flat on-quarter in Q3. In Europe, nevertheless, a further decline is expected in Q3.
“Prices realized by SSAB Americas are expected to be relatively unchanged on average, compared with the second quarter of 2020,” the company continues. “For SSAB Europe, prices are expected to be somewhat lower, with generally lower contract prices partly counteracted by a positive product mix. Also, for SSAB Special Steels, prices are expected to be somewhat lower in the third quarter than in the second quarter of 2020.”
In the first half of 2020 SSAB posted an operating profit of only SEK 92 million ($10.3m), compared with a SEK 2.9 billion profit in H1 2019. The group’s European arm registered an operating loss of almost SEK 600m, while the special steels unit was most resilient against falling profitability, reporting a SEK 942m profit, down -21% on-year.
The biggest negative impact on performance was registered, as expected, during Q2 when the group posted an operating loss of SEK 251m.