Steel Mills

SSAB Americas Shines for SSAB in Q1

April 24, 2016

SSAB Americas reported sales of SEK 2,428 million ($297.5 million) for first quarter 2016 up from 2,321 in Q4. Shipments increased 9 percent from Q4 to 475,000 tonnes. Operating profit, or EBIT, was SEK 55 million ($6.7 million) compared to a loss of SEK 100 mill in in Q4 and profit of SEK 296 million a year ago.

The Americas segment saw lower average plate prices in first quarter but prices are currently improving. Import of plate continued at high levels during first quarter. A new trade case on plate imports was announced April 8 which is expected to benefit demand and pricing.

Demand from steel service centers increased as inventories normalized. Steel demand for wind towers was favorable while railcar demand was slow.

SSAB posted an operating loss of SEK 190 million ($23.3 million), an improvement from a loss of SEK 802 million in fourth quarter. The improvement, said SSAB, was mostly driven by higher volumes, lower maintenance costs and positive synergy impacts, but was negatively impacted by lower average prices. Sales for the quarter increased to SEK 12,964 million ($1.58 billion).

The cost savings program is continuing with a new target reduction of SEK 2.8 billion, an increase of SEK 300 million on an annual basis, during 2017.

In the SSAB outlook remarks for Q2 2016, North American real demand for plate is expected to be unchanged and demand in Europe stable. Trade cases are expected to have a positive impact on import volumes to North American and Europe. SSAB shipments and prices in Q2 are anticipated to increase somewhat from Q1.

During the earnings conference call, chief financial officer Hakan Folin noted that U.S. steel service centers were destocking the whole of 2015.

“They are now replenishing, and basically, what they sell out to their customers they are buying from us to make sure that they keep — are stable on their inventory levels. They are on a fairly low inventory level, but we don’t expect that they will restock, but we don’t see that they will destock further either.

Folin expects recent price hikes in the U.S. to hold but margin pressure will still be present due to increasing scrap prices.

Planned maintenance outages at SSAB Americas for 2016 include a mini-outage at the Mobile facility in Q2 and a larger one in Montpelier in Q4.

SSAB Americas includes production facilities in Montpelier, Iowa and Mobile, Alabama. Both facilities operate scrap based electric arc furnaces, with capacities of 1.2 million tonnes and 1.3 million tonnes, respectively. (Note: Exchange rate conversion based on 1 SEK = 0.12 US $)