Finland-based stainless steel producer Outokumpu has stated that, regardless of the minor restocking by distributors registered in the third quarter of the current year due to rising raw material prices, it sees no major improvement in underlying demand for stainless steel. However, the company expects towards the end of the year to see an improving trend and both prices and volumes are expected to increase in the fourth quarter.
"The stainless steel markets have not seen any major improvement. Underlying demand continues to be weak and the purchasing behavior of steel distributors is very much driven by short-term developments in the nickel price," Outokumpu's CEO Juha Rantanen stated.
In the third quarter of 2009, Outokumpu registered an operating loss of €65 million, compared to a loss of €66 million in Q3 2008, its sales dropped by 54 percent year on year to €587 million, with its stainless steel deliveries decreasing by 26 percent year on year to 238,000 mt. In the fourth quarter of this year, Outokumpu expects its deliveries of stainless steel to be at the same level as in the second quarter, i.e., 268,000 mt.
During the third quarter, Outokumpu continued to cut back production, and was operating at 50-55 percent of its capacities.
Outokumpu's stainless steel average base price has continuously improved this year, standing in Q3 at €1,307/mt, higher than in 2008. "Compared to the average for the third quarter, Outokumpu's average base prices for all flat products in the fourth quarter are expected to increase by €50-100/mt. There is currently temporary pressure on prices but Outokumpu expects prices to remain rather stable during the remaining of the fourth quarter," reads the company's release.
"Outokumpu's underlying operational result in the fourth quarter is expected to improve from the third quarter as a result of increased base prices, improved delivery volumes and tight cost management. With current metal prices, raw material-related inventory gains are expected to be at the same level as in the third quarter, which might take the operating profit close to break-even," said the company in its statement.