SSAB Reports Third Quarter Price and Margin Decrease

Swedish steel mill SSAB remains uncertain about Q3 developments in the European and US markets. Demand is expected to be weak and domestic prices to remain under pressure.

Overall, SSAB was down SEK 314 million (USD 33.4 million) in the second quarter year-on-year to SEK 1,316 million, mainly due to the negative impact of weak European market performance.

"Demand in Europe declined during the second quarter, and SSAB's shipments in Europe fell from last year," the group said. “This was primarily due to a decrease in demand from the automotive industry. Operating profit fell to SEK 66 million from SEK 907 million last year. The sharp rise in iron ore prices and the decline in steel prices have led to exceptional pressure on margins in the European market. ”

While the outlook is currently uncertain for both Europe and the US, SSAB's second-quarter earnings rose significantly in the US to SEK 872 million from SEK 365 million in the second quarter of 2018. compared to the second quarter of last year. Demand was good in most customer segments, although distributor sentiment is cautious, ”the company notes.

To address the uncertainty in the third quarter, SSAB must take a number of flexibility measures, including the temporary shutdown of a smaller blast furnace at the Oxelösund mill in Sweden.

“Prices realized by SSAB Americas and SSAB Europe in the third quarter of 2019 are expected to be lower compared to the second quarter. Prices realized by SSAB Special Steels are expected to be slightly lower in the third quarter. Continuing higher iron ore costs will have a negative impact on margins in the third quarter, mainly for SSAB Europe, but also for SSAB Special Steels, ”the company concludes.