Outokumpu expects production and sales to remain flat in 2020 despite encountering lower sales and delivered shipments through 2019. The company indicated that it expected the stainless steel market to strengthen during the first quarter, supported by seasonality.
Compared to last year’s first quarter, real demand for stainless-steel products is expected to grow by 3.1pc driven by an increase of 5pc in Asia. Meanwhile, demand in the EU and the Americas is expected to decrease by 2.5pc and 1.2pc, respectively. In 2020, total global demand is estimated to grow by 2.6pc compared to 2019 allowing Outokumpu to continue to maintain the same production and sales levels.
Roeland Ban, Outokumpu’s president and chief executive officer, stated that the company’s earnings in 2019 were affected by the challenges faced by the European steel industry due to a surge in unfairly priced imports and unprecedented price pressure caused by the US steel tariffs. The challenges are expected to continue but sales are expected to continue along with production improvements.
Outokumpu total sales declined 6.8pc to €6.403bn in 2019 compared to the previous year with an EBITDA reduction of 46pc to €266mn in the same period in 2018. Capital expenditure for the year decreased 15pc to €221mn compared to 2018.
Stainless steel deliveries declined by 10pc in 2019 to 2.428mn mt compared to 2018. Deliveries in Q4 2019 declined 14.2pc compared to the same quarter a year ago due to a slight slowdown in shipments from weaker than usual demand in longs and flats lines. Distributor destocking in the US, high import penetration in the EU, and low activity in the global automotive industry also impacted deliveries.
EU flats division deliveries declined 5.7pc to 1.459mn mt in 2019 compared to the previous year. Sales in EU decreased 4.2pc to €4.089bn, while delivered volumes in the Americas flats division decreased 21.1pc to 0.601mn mt compared to 2019. Sales in the American division decreased 21.5pc to €1.346bn in the same period.
For the Americas division, real demand for stainless steel products shrank by 10pc in 2019 compared to the previous year. The longs division decreased deliveries by 20.1pc in 2019 to 0.226mn mt compared to the previous year with sales posting a softer decline of 13.2pc to €642mn in the same period.
The ferrochrome division increased production to 0.505mn mt in 2019, up 1.6pc compared to the previous year. Yet sales declined 15pc to €461mn from 2018. Business area ferrochrome’s profitability was negatively impacted by lower ferrochrome benchmark price. The investment in ferritics production in Calvert is on track and expected to start production in the Q4 2020.