The European steel industry has sought relief from high energy costs and cheaper Asian steel entering the region, and was expected to benefit from tighter EU steel import restrictions introduced in July and the bloc’s carbon border levy on emissions-intensive imports
International News via Reuters:
Swedish steelmaker SSAB reported a quarterly operating profit slightly above market expectations on Wednesday, supported by higher steel prices as the European Union’s import curbs kicked in.
However, its shares fell 2.6% by 0917 GMT, as analysts from Jefferies and JPMorgan said its fourth-quarter guidance for somewhat higher pricing and stable shipments in the Americas looked soft.
The European steel industry has sought relief from high energy costs and cheaper Asian steel entering the region, and was expected to benefit from tighter EU steel import restrictions introduced in July and the bloc’s carbon border levy on emissions-intensive imports.
SSAB’s CEO Johnny Sjostrom told Reuters that inventories of imported steel in Europe had largely been worked down, which helped lift prices in the third quarter.
“We can see signs of improved supply-demand balance in the European market,” Sjostrom said in the earnings statement. SSAB also increased shipments of premium steel products in the region.
Market conditions remain particularly strong in European plate steel, where limited supply supports a significant supply-demand gap, Sjostrom said. “When it comes to plate, there’s no idle capacity to be opened up.”
SSAB’s operating earnings rose to 2.16 billion Swedish crowns ($217.2 million) in the third quarter. Analysts were expecting 2.14 billion on average in a company-provided poll.
Higher freight and energy costs linked to the Iran war weighed on the result, particularly in the Special Steels unit, although most of the increase was offset by increased steel prices, Sjostrom said.
SSAB could not fully offset the rise in transportation costs in the quarter, but Sjostrom said it would pass them on to customers in the final three months of the year.
The company expects fourth-quarter shipments to be somewhat lower in Special Steels, higher in Europe and stable in the Americas, with prices seen somewhat higher across divisions, it said.
“Americas 4Q pricing is a disappointment,” Jefferies wrote in its first take on the report.
($1 = 9.9441 Swedish crowns)
Reporting by Marta Frąckowiak in Gdańsk; Editing by Milla Nissi-Prussak
