Oct 25, 2022
European Steelmakers Will Shut More Furnaces, SSAB CEO Warns

(Bloomberg) -- European steelmakers will probably further cut output as the threat of a recession slows demand and pushes prices down, according Swedish producer SSAB AB. 

The region’s energy crisis is hurting steel companies by crippling consumption from crucial customers like manufacturers and builders, while also raising plant costs. Jefferies Group LLC estimates that about a fifth of European steel capacity is already curtailed, with giant ArcelorMittal SA bearing the brunt of the cuts.

That marks a sharp end to a boom-era for the sector, when steel prices surged to a record in the aftermath of the Covid pandemic. In a sign of what’s to come, SSAB’s European orders dropped 10% in the third quarter. Against that backdrop, it decided to bring forward maintenance at a blast furnace in Finland by 12-18 months.

“Quite a few of our competitors have taken down blast furnaces,” SSAB Chief Executive Officer Martin Lindqvist said in an interview on Tuesday. “I think we’ll see capacity cuts in Europe.”

European Steel Prices Slump as Factories Face Slowing Economy

The Swedish producer will bring forward maintenance at one unit at its Raahe facility in Finland. The furnace will stop for six to eight weeks from mid-November.

“Given the market situation, we decided to do it right now instead,” Lindqvist said. “The market will be what the market will be, but we have a fairly good possibility to handle that in a decent way.” 

Despite the weaker European market, SSAB’s third-quarter results beat estimates, largely due to contributions from specialty steel sectors and the Americas. The firm has also focused on rebuilding since the last downturn in the market.

“We have a much stronger mix, we have a better flexibility and a better ability to deal with a downturn than we had maybe three, four, five years ago,” Lindqvist said. 

©2022 Bloomberg L.P.

Source: Bloomberg