Uncertainties to impact stainless market in 2024: Aperam

Uncertainties in the stainless steel market recovery will persist in 2024 and beyond, Aperam’s ceo Timoteo Di Maulo says in the company’s annual report obtained by Kallanish.

Europe has been showing signs of industrial recession. Di Maulo sees persisting margin pressure and “historically low volumes.”

Last year Aperam’s Stainless & Electrical Steel and Services & Solutions segments reported lower volumes and prices as well as strong inventory valuation charge affected by negative price and cost development. However, Aperam’s recycling division became the largest earnings segment. In 2022 the company verticalised by completing the acquisition of ELG, the recycler of stainless steel and superalloys that belonged to German conglomerate Haniel (see Kallanish passim). In Europe it now benefits from a secure supply of scrap using more than 80% of scrap in its facilities, the report says.

The company continues to be exposed to price uncertainty of nickel, chromium, molybdenum, stainless and carbon scrap, biomass and iron ore, which it purchases under short-term and long-term supply contracts, as well as on the spot market. Aperam also reports a strong impact of the energy and natural gas inflation last year.

The steelmaker covers its energy needs through a mix of forward hedges, spot and fixed price contracts. Considering the strong impact of energy on margins, it is now scaling up its renewable energy production through on-site installations targeting a 30% energy reduction by 2030.

“After a number of exceptional years for Aperam, 2023 was a difficult year for the stainless steel industry as a whole,” Aperam chairman Lakshmi N. Mittal comments. “There were significant economic pressures to navigate, especially in Europe where we experienced continued margin pressure and historically low volumes. Despite these headwinds, we remained resilient, in particular demonstrating the value of our new, enhanced Recycling and Renewables segment and its exposure to the circular economy. … With targeted gains of €200 million ($215m) over the period from 2024 to 2026, our focus continues on advancing our operational excellence.”

Owing to lower sales volumes and weaker prices, the company’s turnover last year decreased by 19.2% year-on-year to €6.5 billion ($7 billion). Shipments declined by 4.8% to 2.2 million tonnes. Adjusted Ebitda reached €304m compared with €1.1 billion the previous year (see Kallanish 12 February).

Natalia Capra France