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Outokumpu Details EUR 240 Million of Investments in Stainless Capacity

10/24/2007 - Outokumpu has announced it will invest an additional EUR 240 million over the next five years to expand quarto plate capacity in Sweden and the U.S., and to expand the service center offering in Germany.

Outokumpu has announced it will invest an additional EUR 240 million over the next five years to expand quarto plate capacity in Sweden and the U.S., and to expand the service center offering in Germany.
 
The company says the investments are in line with its new strategy phase, announced on September 2007, to increase the share of direct end-user and project sales and to expand the value-added special products capacity. 
 
Outokumpu, a market leader in stainless steel quarto plate (individually rolled wide and thick plate), has a current production capacity of some 160,000 tonnes of mainly tailor-made plate in special grades. The company’s existing capacity has been fully loaded over the past few years, and growth of the overall quarto plate demand is estimated to be strong in the coming years, as driven by high investments into such sectors as energy, desalination, and other process industries. Additionally, the share of the high-strength low-nickel duplex grades is estimated to grow faster than the overall market.
 
Against this surging demand, Outokumpu decided to expand its production capacity in Degerfors, Sweden, and New Castle, Ind., (U.S.) by some 100 000 tons. The expansion will help the company meet its customers’ future demand and to match the general growth in this highly attractive product range.
 
As part of the expansion, Outokumpu’s current equipment will be upgraded and new equipment installed to increase the capacity at Degerfors to 190,000 tonnes (an 80,000-tonne increase) and at New Castle to 70,000 tons (a 20,000-ton increase). The investments—some EUR 180 million at Degerfors and EUR 40 million at New Castle—will spread out to five years with the majority of cash out-flows in 2008 and 2009. The returns on the investments are well above the Group target of 13%. The newly installed capacity is (for the most part) scheduled to be available in 2010.
 
In time, Outokumpu's quarto plate product mix will shift more toward value-added tailor-made plates and special grades, especially Outokumpu's proprietary lean duplex and other duplex grades. Corrosion-resistant high-strength duplex grades offer considerable material weight savings to customers and attractive opportunities to Outokumpu. Typical applications would include pressure vessels and open tanks, heavy-walled pipes, bridge sections and process equipment.
 
Expanding the Service Center Offering in Germany—To improve and increase its service offering to end-user and project customers in Germany, Outokumpu will expand the stock and processing capacity of its Willich Service Center in northwestern Germany. The EUR 20 million investment, which comprises a new cut-to-length line and a new slitting line, will help Outokumpu expand the annual stock and processing capacity in Willich from the current 60,000 tonnes to some 110,000 tonnes by 2009.
 
Outokumpu, a market leader in stainless steel quarto plate (individually rolled wide and thick plate), has a with a global market share of some 20%.