Swedish steelmaker SSAB has indicated that market conditions are improving, and the company expects strong activity during Q1 2021.
Steel demand is projected to continue strengthening driven by customer demand as well as restocking. However, uncertainty remains regarding the COVID-19 pandemic and its midterm impacts on demand, the company noted in its earnings report on Jan 29.
SSAB anticipates global demand for high-strength steel to strengthen and expects its special steel prices to rise in Europe and the Americas in the first quarter compared to Q4 2020. Raw materials’ prices will increase as well.
The company’s pilot 1mn mt demonstration HYBRIT DRI plant was initiated during 2020 and will be ready to supply electric-arc powered furnaces with HBI within three years. SSAB also reiterated its goal of becoming fossil-free by 2045, and its continuing efforts to be the first to market fossil-free steel in 2026.
SSAB’s production fell to 7.54mn mt of crude steel with shipments at 6.46mn mt in 2020, a 1.5pc decline from 7.62mn mt of crude steel output with shipments at 6.56mn mt in 2019.
The company reported an operating loss of SEK325mn ($38.9mn) in Q4 2020 from SEK2.16bn in Q4 2019 as a result of weakened markets due to the pandemic.
SSAB’s revenue reached SEK16.99bn in Q4 2020 from SEK16.97bn in Q4 2019 while its EBITDA tallied at SEK1.44bn compared to a loss of SEK127mn over the same period. Net debt dropped to SEK10.3bn in Q4 2020 compared to SEK11.7bn in the prior-year period.
The market improved near the end of 2020 and SSAB’s shipments and capacity utilization increased, to lift its fourth quarter earnings to SEK557mn compared to a loss of SEK1.13bn Q4 2019.
All three of SSAB’s steel divisions increased operating profit due to improved capacity utilization and higher shipments in Q4.
The company’s operating cash flow was strong and tallied at SEK2.93bn in Q4 2020 compared to SEK1.32bn in Q4 2019.
SSAB ends talks to buy Tata IJmuiden
SSAB has withdrawn its pursuit to purchase Tata Steel Europe’s 7.3mn mt per year capacity Dutch plant, IJmuiden steelworks, along with its downstream resources due to technical problems.
The transaction withdrawal, also confirmed by Tata, adds to a series of roadblocks faced by the Indian steelmaker. However, it will continue its commitment to search for a solution, according to reports.
The latest development follows more concentrated studies by SSAB wherein it concluded that an acquisition would be difficult due to the restrictions in assimilating IJmuiden with SSAB’s approach. Motives cited by SSAB in a statement on Friday include uncertainty in implementing the industrial plan with its chosen technical solutions and within its preferred timeframe. SSAB does not feel it can unite IJmuiden into its preferred sustainability strategy.
SSAB continued that efforts involved in the transaction are not able to warrant enough of the expenses needed to streamline and the deal does not meet its financial outlook.