Salzgitter Group’s crude steel production in H1 fell by 13pc or 459,400mt to 2.95mn mt from H1 2019 amid a 10-70pc reduction in capacity utilization at Salzgitter’s subsidiaries in Q2. Crude steel output dropped by 24pc or 401,100mt to 1.27mn mt in Q2 from the prior year quarter.
Salzgitter Group anticipates a significant reduction in sales in H2 and expects the impact of the COVID-19 crisis to bottom out in the second quarter (Q2) and Q3 as reported by Davis Index. However, the timeline of the macroeconomic recovery in H2 is uncertain.
In the Strip Steel business segment production at the Salzgitter location have been scaled back from May with short-time work hours. Amid low steel demand in Europe, the quotas under the EU anti-dumping measures will be largely unexhausted and thus provide no safeguards to the domestic industry.
With imports volumes of plates expected to remain at high levels, the market for the Plate/Section Steel segment will remain competitive. The Ilsenburg plant is expected to run at a slightly lower capacity in Q3, while the Mülheim plant will run at near full utilization rate supported by smaller orders.
Reduced orders from the oil and gas exploration sector will impact the demand for the large and medium-sized pipes segments. The first signs of recovery in this segment was visible from June and the markets in the Far East were among the first to recover. The EUROPIPE Group’s business remains effected underutilization of the German plant, while the American division will benefit from the prior year’s bookings through H2. Capacity utilization at the precision tube’s segment is expected to improve slightly, while the stainless steel segment expects relatively stable performance
| Salzgitters Group steel production and shipment H1 2020 | |||||
|---|---|---|---|---|---|
| Unit: mn mt | Q2 2020 | Q2 2019 | H1 2020 | H1 2019 | YoY change |
| Crude steel production | 1,271,200 | 1,672,300 | 2,952,700 | 3,412,100 | -13% |
| Shipments | |||||
| Strip steel | 781,800 | 1,145,400 | 1,990,200 | 2,317,600 | -14% |
| Plates/Section | 486,000 | 539,700 | 1,017,100 | 1,100,400 | -8% |
| Steel tubes | 77,800 | 1,35,300 | 2,13,200 | 2,81,800 | -24% |
Investments
* Salzgitter Group’s hot-dip galvanizing Line 3 project to supplement existing capacities by around 500,000mt annually is currently in the engineering stage. The project will strengthen the company’s premium segment for auto customers and will be commissioned in 2022.
* The Wind Hydrogen Salzgitter project, which will produce electricity via wind power and electrolytic hydrogen will commission a 2.5-megawatt PEM electrolysis plant by the end of 2020. This green initiative is a step towards hydrogen-based steelmaking.
* The company continues to optimise and expand its Continuous Casting Line 1 and Coil Line 4 will be replaced to improve quality standards.
* In the Plate/Section division, the new heat treatment line project at Ilsenburg plant is due to be commissioned in early 2021.
* The company is expanding capacities its Mexican precision tubes company at El Salto to produced a range of seamless cold stainless steel products.
Financials
The decline of Salzgitter Group’s operating volume due to the pandemic decreased its earnings in H1. External sales fell by 20pc to €3,631mn ($4,284.72mn) in H1 from the prior year period. The group’s reported a consolidated loss of €144.7mn compared to a profit of €96.4mn in H2 2019.
($1=€0.847)