Swiss long steel producer Schmolz + Bickenbach (S+B) is exploring more government aid to combat a slump in orders caused by coronavirus and will drive restructuring further by closing Ascometal’s Dunkirk rolling mill, CEO Clemens Iller said Wednesday.
On a Q1 results call, Iller said the company had seen a recovery in orders this year but that this was halted from the second half of March, with no pick-up expected in the first half of this year.
“COVID-19 came at the wrong moment for us,” he said.
Before the pandemic hit, S+B’s order book was improving but it started to see customers increasingly reschedule orders from late March, which will have even more of an effect on its Q2 results.
The company introduced short-time working measures across the production network, which entails reduced working hours and government support for workers’ wages.
However, it will need more financial support on short-term liquidity protection measures and is now looking into public loans and other government support.
The already in place restructuring plan will continue with the closure of Ascometal’s Dunkirk rolling mill in France by mid-March. The closure will save S+B Eur8 million per year, according to Iller.
Germany-based Deutsche Edlestahlwerke will also see reductions in functions, while US-based Finkl Steel — heavily affected by the oil price slump — will see restructuring of its sales organization.
“From our current perspective, we do not expect a gradual normalization of demand to set in until the end of the first half of 2020 at the earliest, with a possible continued recovery expected in the second half of the year,” the company said.
Sales volumes dropped 17.1% year-on-year to 457,000 mt in Q1. The fall is primarily attributable to decreasing sales volumes for quality and engineering steel, which were down 21.0 % on the back of the sharp drop in demand from the automotive industry. Sales volumes also decreased in stainless steel and tool steel, but with less sharp declines of 3.2 % and 10.8% respectively.
Crude steel production was down 11.3% year on year to 525,000 mt in Q1 and the order backlog droppped 24.5% to 431,000 mt.
Base prices are under pressure said S+B with soft demand and increasing competition in the quality and engineering steel segment particularly, while lower alloy surcharges also contributed to weakening prices.
Average sales prices of quality and engineering steel dropped 13.5% year on year in Q1 to Eur915/mt, while tool steel saw a 7.1% decrease to Eur2,867/mt. Stainless steel sales prices dropped slightly, by 0.3% to Eur3,101/mt.
— Laura Varriale