Voestalpine reports higher flats steel sales, postpones stainless plant

Austrian steelmaker Voestalpine benefitted from higher flat steel sales in the final quarter of last year due to a “rapid rebound” in demand in Europe, while the stainless steel plant opening in Kapfenberg has been delay until next year, the company said Feb 9.

During an earnings call on Voestalpine’s financial Q3 (October-December 2020) results, CEO Herbert Eibensteiner said the recovery in the automotive, construction and white goods sector is ongoing with orders just shy of pre-pandemic levels. However, the oil & gas and aerospace sectors are still lagging behind.

Voestalpine saw an increase in sales of flat steel products by 10% quarter-on-quarter but said that due to the structure of its customer contracts, the Steel Division benefited only in part from significantly higher spot market prices. Voestalpine focuses on long-term contracts with customers, which means that changes in market prices affect the company usually with a time-lag.

Although all blast furnaces at the Linz and Donawitz sites are back running, wire rod production is still not at full capacity utilization. Workers on reduced hours by year-end totaled 1,100 in Austria, down from 10,000 in early 2020 and will continue to go down, said Eibensteiner.

The opening of the new stainless steel plant in Kapfenberg, Austria, is behind of schedule because of delay in plant equipment supply. The plant is scheduled to start full production in early summer 2022. The initial production start was envisaged for the second half of this year.

Texas direct reduction plant ‘short of expectation’

The steel production cutbacks in both North America and Europe in 2020 hampered the company’s US direct reduction plant in Texas, which is also supplying Voestalpine’s steel production in Europe. The operating results of the Texas DRI plant still fall “short of expectations despite the revenue gains in the third quarter of the business year.”

“The company’s success in acquiring new customers in the Far East succeeded in offsetting this market weakness only in part,” said Voestalpine in the earnings report.

“Thanks to stronger demand for steel in North America and the associated increase in the prices for steel scrap, the market environment improved considerably toward the end of the reporting period,” it said.

Voestalpine noted that raw material prices continued to rise during fiscal Q3 despite global market distortions arising from the COVID-19 pandemic.

Although the market improved considerably in the quarter on the whole, the revenue of the Steel Division fell by 13.5% year on year in the first three quarters of the business year 2020/21 to EUR2.96 billion. Deliveries of flat steel products decreased by about 5% during the nine-month period and the division’s prices dropped whereas raw material prices remained high.

— Laura Varriale