SSAB Europe to idle another blast furnace on weak EU market

2019-10-24

Oct. 23, 2019 - Swedish steelmaker SSAB will idle another blast furnace at its Raahe steelworks in Finland from the end of November in a bid to cut costs and capacity, the company said during its earnings presentation.

The blast furnace has a capacity of 1.3 million crude steel/year and the stoppage will at least be for four-six weeks. The company will decide when to restart it according to market conditions, an SSAB spokesman told S&P Global Platts.

SSAB has another blast furnace in Raahe, also with a capacity of 1.3 million of crude capacity, that will continue to run, the company confirmed to Platts.

SSAB since mid-September has already idled a small blast furnace with a capacity of 500,000 mt of crude steel/year at its Swedish plant in Oxelosund. The spokesman confirmed that the restarting date for this plant is also linked to market condition. In Oxelosund, the company is currently running a second blast furnace that has a capacity of 1 million mt of crude steel/year.

SSAB has in total five blast furnaces in Europe, with the biggest in Sweden having a capacity of 2.5 million of crude steel/year.

Demand for SSAB Special Steels weakened during the third quarter, primarily in Europe. Shipments were down and operating profit was lower year on year at SEK 358 million. Margins declined during the quarter, mainly due to higher iron ore costs, the company said.

According to the press note, demand in Europe was seasonally lower and weaker business conditions meant that the decline was more pronounced than usual.

Market prices of iron ore decreased during the latter part of the quarter and will lead to lower raw material costs for SSAB Europe during the fourth quarter, the company expected.

Heading toward the end of the year, the company sees a more pronounced seasonal slowdown than usual.

OUTLOOK

In North America, demand for heavy plate was estimated to be relatively stable for the fourth quarter of 2019. In Europe, underlying demand was expected to be weaker, especially toward the end of the year. Global demand for high-strength steels was expected to be somewhat weaker during Q4, primarily related to Europe.

For SSAB Americas, Q4 shipments were expected to decrease compared with Q3, mainly as a result of a planned maintenance outage in Mobile. Shipments for SSAB Europe were expected to be at the same level, sequentially, whereas shipments for SSAB Special Steels were expected to decrease somewhat in Q4.

Prices realized by SSAB Americas and SSAB Europe during Q4 were expected to be lower, sequentially. Prices realized by SSAB Special Steels were expected to be somewhat lower during Q4.

PRODUCTION

In Europe, Q3 crude steel production was down 11% year on year to 930,000 mt and down 17% compared with the second quarter of 2019. Rolling production was down 5% on the year to 980,000 mt and down 18% from Q2. This decrease was partly because of the planned maintenance of the rolling mill and partly due to a lower production rate amid weaker demand.

External shipments of steel in Q3 were down 2% on the year to 794,000 mt and down 13% compared with Q2.

For the Group as a whole, Q3 crude steel production was down 1% on the year to 1.9 million of crude output and down 9% compared with Q2. Q3 rolling production was down 5% on the year to 1.696 million mt and down 12% compared with Q2. SSAB's Q3 steel shipments were at 1.6 million mt, down 2% on the year and down 6% sequentially.