SSAB Beats Profit Expectations as EU Import Curbs Lift Steel Prices

Oct. 28 (Reuters) - SSAB shares fell 2.6% by 0917 GMT on Wednesday after analysts at Jefferies and JPMorgan described the Swedish steelmaker’s fourth-quarter outlook as weak, despite its forecast for somewhat higher prices and stable shipments in the Americas. The company reported quarterly operating profit slightly above market expectations, helped by rising steel prices following the introduction of European Union import curbs.

Prices rose in the third quarter after inventories of imported steel in Europe were largely depleted, SSAB CEO Johnny Sjostrom told Reuters. The European steel industry, which has faced high energy costs and an influx of cheaper Asian steel, was expected to benefit from EU import restrictions that took effect in July and the bloc’s carbon border levy on emissions-intensive imports.

SSAB Beats Forecast as Plate Supply Tightens

• SSAB reported operating earnings of 2.16 billion Swedish kronor ($217.2 million) for the third quarter.
• The result exceeded the average forecast of 2.14 billion kronor in a poll conducted by the company.
• Shipments of SSAB’s premium steel products increased in Europe.
• Sjostrom said the market showed signs of moving toward a better balance between supply and demand.
• Conditions are particularly strong for plate steel, Sjostrom said.
• Tight supply has created a significant gap between supply and demand, with no idle capacity available to bring back online.

Sjostrom said higher steel prices offset most of the increases in freight and energy costs related to the Iran war, but those costs still hurt results, particularly in Special Steels. SSAB was unable to recover all of the higher transportation costs incurred during the quarter, but Sjostrom said the company would pass them on to customers in the final three months of the year.

For the fourth quarter, SSAB expects shipments to decline somewhat in Special Steels, rise in Europe and remain stable in the Americas. Prices are expected to be somewhat higher across all divisions. Jefferies described fourth-quarter pricing in the Americas as disappointing in its initial assessment of the report. ($1 = 9.9441 Swedish kronor)