Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Spanish stainless steel producer Tubacex said that COVID-19 impacted raw material prices — especially nickel, chromium and molybdenum — throughout Jan to June which affected the company’s output and balance sheet. Several stalled projects also reflected on its balance sheet. Sales orders are projected to be negative in H2, according to a company release.  


The price of nickel in H1 closed at $12,837/mt, a fall of 9pc in the year; molybdenum dipped 15.6pc in relation to the 2019 year-end, while the price of chromium has increased by 12pc.


Tubacex reported net sales at €282mn in H1 (Jan-June) down 12.8pc from Jan-June 2019. Operating profit dipped 40pc to €19.8mn in H1 from the year prior. The company reported its net loss at €8.3mn in H1 against a net profit of €5mn in H1 2019. 


In Q1 (Jan-March) raw material prices were hurt with COVID-19 related lockdowns in China. In Q2 (April-June), however, with a recovery in China’s economy, impacts of price volatility were offset in H1. Tubacex is cautious of spike in COVID-19 cases which keeps price volatility at extreme high levels.


Tubacex performance was impacted primarily because of drop in sales in power generation market with lockdown in China since January followed by other countries from March. Reduction in global activities severely impacted Tubacex’s H1 results. 


The company’s Q2 performance was affected more compared to Q1, due to COVID-19. However, the company’s geographic and product diversification coupled with rapid plan of action and adjustment of costs at all levels, resulted in a positive operating performance. 


The company’s H2 projects are stalled with several investors backing out due to the fear of COVID-19. There were some cancellation of orders and delay in major projects. For H2, the company foresees sales to be in the negative territory. However, resumption of activity is expected by the end of 2020 in the power and energy segment and in national companies (NOC) where TUBACEX has been a major player technically and commercially. 


Tubacex has not provided any guidance for the remaining year as they are unable to weigh in the effects of COVID-19 worldwide. 


Tubacex is a multinational group headquartered in Alava that manufactures stainless steel and high-alloyed tubular products (tubes and accessories). It has production plants in Spain, Austria, Italy, the United States, India and Thailand, as well as Saudi Arabia, Dubai and Norway through the NTS Group. The main demand segments for the tubes manufactured by Tubacex are the oil and gas, petrochemical, chemical and power generation industries.


($1 = €0.84) 

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