SSAB Americas Reports Lower Shipments But Higher Profits

Operating profit improved to SEK 268 million ($32 million) from SEK 45 million ($5.3 million) in Q4 2020 and SEK 151 million ($18 million) in Q1 2020.

Higher scrap pricing resulted in SSAB Americas’ scrap purchasing price jumping 36% from the prior quarter. Spot pricing has begun to de-escalate in April.

SSAB’s market share continues be good in North America, said President and CEO Martin Lindqvist, adding that a future infrastructure bill would be “very positive for us.” Service center inventories in North America remain low and little sign of restocking has been evident so far.

“Slab inventories are still on the low side,” said CFO Hakan Folin. “We expect somewhat higher volumes in Q2 than in Q1, but we still have a little too low slab inventory.” The company experienced lower production primarily at its Montpelier, Iowa, mill due to weather-related issues this winter. 

A planned outage is scheduled for its mill in Mobile, Ala., in the fourth quarter, which will include the quench and temper lines. The expansion of the QL6 line was put on hold last year and is expected to be completed in mid-year 2022, adding nearly 100,000 metric tons of new quenched and tempered capacity.

SSAB Group Performance 

“SSAB’s earnings improved sharply during the first quarter of 2021,” said Lindqvist. “Demand is strong, prices are increasing and we have taken strategic steps in our transition to a fossil-free steel production. The recovery that started during autumn last year has strengthened during the first quarter. SSAB’s production level has been stable and together with better prices and higher shipments, the result increased by SEK 1.4 billion compared to the fourth quarter of 2020. Operating profit for the first quarter amounted to SEK 1,993 ($343 million U.S.).”

Revenue for the first quarter of 2021 was SEK 19.66 billion ($2.35 billion U.S.) up 5% compared to the first quarter of 2020 and up 16% compared to the fourth quarter of 2020. Steel shipments for the quarter totaled 1.837 million tons.

Sustainability

SSAB is committed to a 35% reduction in greenhouse gas emissions, both direct and indirect, by 2032 (based on 2018 figures). The company’s goal is to be a fossil-free steel producer by 2045.

The HYBRIT demonstration plant for fossil-free sponge iron is scheduled for completion in 2026 and will have an annual capacity of 1.3 million metric tons. A collaboration with AB Volvo will culminate in the world’ first vehicles to be made of fossil-free steel.

Construction of a hydrogen storage facility outside Lulea is underway to develop storage technology. Stored hydrogen gas can be provided to energy providers when the electricity system is under strain.

“SSAB’s [sustainability] transition is progressing at the highest pace possible and I am convinced that we can further strengthen our leading position,” said Lindqvist.

Outlook

Steel demand is strong in the second quarter of 2021, driven by underlying demand and customer restocking. High-strength steel is also showing strength in almost all markets in all geographies. Special Steel shipments are expected to remain high in Q2, but somewhat lower than the record high reported in Q1. Increased shipments are anticipated from SSAB Europe and SSAB Americas. Realized prices in the Americas and Europe divisions are expected to be significantly higher on average compared to the first quarter due to the lag effect. SSAB Steel prices are estimated to be “somewhat” higher than the first quarter. Higher prices will be partially offset by increased raw material costs, particularly iron ore, the company said.

(Note: 1 Swedish Krona = 0.12 U.S dollar)