Swedish steelmaker SSAB is repositioning away from standard products such as hot rolled coil to focus on advanced and premium grades, president & chief executive Johnny Sjöström said during its Capital Markets Day this week in Oxelösund, attended by Kallanish.
It aims to increase shipments of its premium product offering to 65% by 2030 and 75% by 2035, compared to 55% today. As a result of this, the company expects to produce less standard grade HRC.
“In a world of overcapacity, the only way to be successful is being unique and create unique customer value” Sjöström said.
He noted that other companies who were struggling to make money were now also looking at focusing investments on downstream operations for value-added products. “We have already done that journey” he noted, with the past acquisitions of Tibnor and Ruukki. This gives the company diversification, he added.
“The market has been able to buy extremely cheap material coming from Asia, from China, material has been subsidised, not even covering the cost of variable costs, the raw materials. That is not sustainable,” he said.
The move to premium products will mean less volatility, and less sensitivity to market conditions. This will mean the firm is less dependent on spot prices.
It will now focus on three key areas. It will expand its offering of advanced steel grades, with SSAB Special Steels’ shipments expected to increase by approximately 5% per year until 2030, while SSAB Europe will gradually increase the share of premium products.
Its value-add services and solutions will be supported by subsidiaries Tibnor and Ruukki Construction.
In the third area, decarbonised steel, the steelmaker expects its European division to have shipments of 1 million tonnes/year in five years time. The company notes a premium value of €200-300/tonne ($230-245/t). However, it sees a circa 15% share of SSAB Zero and SSBAB fossil-free products volumes being sold with a premium after the EAF transformation.
It notes a strong demand increase for high-strength steel in past years, which is expected to continue beyond 2030. This is in the sectors of automotive, buildings and infrastructure, and mechanical equipment.
It will achieve the transformation through its planned investments, which include building electric arc furnaces in Oxelösund and Luleå, as well as a new mini at the latter. It has also adjusted its technical footprint for Raahe, away from a mini mill, to an “Oxelösund-like” solution, instead “leveraging Raahe’s existing downstream assets”.
When asked by Kallanish, Sjöström did not disclose a date by when this would happen or the remaining lifespan of the asset, as it was dependent on raw materials supply such as scrap. Having iron ore-based production in Finland will help it to mitigate this risk.
Carrie Bone UK
