SSAB posts Q3 profit, sees caution among US buyers

This was Lindqvist’s last time reporting as the leader of SSAB. Johnny Sjöström, the new president and CEO, will take over on Oct. 28.

SSAB Americas

The company’s Americas division, headquartered in Mobile, Ala., reported a cautious North American market in Q3. And it expects the same for the remainder of the year. At the same time, it remains upbeat on the region’s long-term potential.

Below are some key figures for SSAB Americas as disclosed in SSAB’s Oct. 23 interim report.

Revenues in the Americas declined 35% year-over-year, primarily as result of lower steel prices. But while prices have declined, they’re down from very high levels, Lindqvist said.

Quarterly steel shipments of 398,000 metric tons (438,720 short tons) declined 9% from a year earlier. Crude steel production plummeted 36% to 189,000 mt.

The company has now shipped ~100,000 mt of SSAB Zero, its US-produced green steel. It said it is still applying the €300/mt green steel premium to its fossil-free steel, HYBRIT.

SSAB said the shipment and production declines were primarily due to a ~€450 million maintenance outage at its plate mill in Montpelier, Iowa. The company had disclosed in its Q2 results that it would be moving up the planned outage into Q3 in anticipation of a better Q4.

An SSAB spokeswoman confirmed that the 27-day outage at the Montpelier mill was completed on Oct. 5.

Demand in North America

SSAB Americas reported declining demand for heavy plate in North America. And distributors are maintaining low inventory levels and continuing to be cautious with their buying as prices continue to slip.

Additionally, it’s typical in a US election year to see more “wait and see” from buyers as the election draws closer and through inauguration day, Lindqvist noted.

Thus, the Q4 outlook for the Americas segment is mixed: SSAB expects a 5-10% rise in shipments, but a 5-10% decline in steel prices vs. Q3. At the same time, it expects raw material costs to be higher.

Energy—notably wind and other renewables—was the only bright spot in the demand outlook for Q4:

SSAB remains optimistic about the long-term prospects of a “structurally undersupplied” US plate market, Lindqvist said. He cited the country’s massive infrastructure and renewable energy needs as positives driving heavy plate demand into the future.

With better capacity utilization rates, cost position, and quality than its competitors, SSAB Americas is well positioned despite a tough market, he said.

Regardless of the outcome of the presidential election, Lindqvist said, “We will continue to work hard to make sure that [SSAB Americas is] the relevant producer in the US with the strongest market share.”

According to the executive, interest in SSAB’s green steel products continues to grow, with “huge interest” from the construction, heavy transport, and automotive sectors.

Europe

SSAB said that weak demand continues to plague the European markets. The company plans to perform Q4 maintenance outages at its mills in Oxelösund, Sweden, and Raahe, Finland.

“Further adjustments to the low demand will take place in the steel divisions within the framework for flexible working hours and a restrictive approach to costs,” SSAB added.

In Europe, the company reported Q4 prices to be down 5-10% and shipments to be 0-5% lower vs. Q3.

Lindqvist offered the US as an example when an analyst inquired about decarbonization in the European steel industry. The US steel industry was able to change from mostly big, integrated producers to “highly cost-efficient, highly automated, very flexible mini-mills,” he pointed out.

“And I think that is where Europe, over time, will head as well,” he continued, with more mini-mills and high-quality producers in the market. “And SSAB will definitely be one of them, if not the leading one,” he added.

“It kind of sounds like you’re going to end up being the ‘Nucor of Europe’,” the analyst said.

Lindqvist responded: “I would love to be…the ‘Nucor of Europe’ because they are a very impressive company.”

Special steels

SSAB Special Steels also reported cautious activity in North America in Q3.

It said demand weakness continued in Europe, noting, “Besides the seasonal downturn, a weaker underlying market could be noticed.”

For special steels, SSAB expects Q4 shipments and prices to decline 0-5% vs. the previous quarter.

SSAB Group Results

All told, the SSAB Group’s quarterly results declined almost across the board from last year.