SSAB says economic uncertainty in Europe, slowing growth in China, and a weakening U.S. economic recovery combined to dampen steel demand during the second quarter of this year.

The company reported sales of SEK 10,816 in the second quarter and operating profit of SEK 755 million.

The operating cash flow remained strong and the net debt/equity ratio was further reduced during the quarter.

The strongest segments on the American markets were material handling (primarily the mining industry), as well as energy and, in part, construction machinery. In APAC, too, the mining sector performed strongly and the mobile crane sector also showed signs of recovery. Within EMEA, segments linked to quenched steels were stable, while demand for strip products was weaker.

Capacity utilization during the quarter was normal at SSAB’s American plants, while it was at approximately 80% at its Swedish production plants. As estimated in the first quarter, the production outage resulting from the gas pipe damage in Oxelösund led to a shortfall in quenched steel production of 10 thousand tonnes.

The third quarter will be affected by scheduled maintenance outages at the company’s Swedish plants. Production will otherwise be regularly adjusted to demand. At present, it is difficult to assess the development in the steel markets, SSAB says. There is much to indicate continuing excess capacity, primarily within strip products in Europe. Demand for quenched steels is expected to be stable. The company is witnessing a weakening of demand in the American markets, partially due to extended summer outages at end-customers, and partially attributable to a wait-and-see approach at steel service centers. Despite a somewhat lower rate of growth in China, the company perceives great possibilities for its high strength steels and development projects, both there and in the rest of Asia.

SSAB’s major capital expenditure projects are now in place and the introduction of steels from the new production lines is taking place with its customers. Globally, it are continuing to increase the number of development projects together with customers, and the reported efficiency program within EMEA is proceeding according to plan. A lower capital expenditure level together with continued efficiency work throughout the group will support a strong cash flow generation going forward. Despite the somewhat uncertain economic climate, SSAB perceives continued great possibilities in the unique range and quality of our product offering.