Damstahl Bi-Monthly Stainless Steel Briefing May 2013

Transcription

1 Damstahl Bi-Monthly Stainless Steel Briefing May 2013 Damstahl 2013, Damstahl - a member of the NEUMO-Ehrenberg-Group - 1 -

2 Damstahl Bi-Monthly Stainless Steel Briefing Issue 34, May 2013 Contents Stainless Steel at a Glance European Industry News & Business Climate (PMI = Purchasing Managers Index) Market Performance: Relevant Issues in Germany Netherlands Denmark Sweden Norway Slovenia Damstahl 2013, Damstahl - a member of the NEUMO-Ehrenberg-Group - 2 -

3 Stainless Steel at a Glance Here is The big Hangover Demand: The situation in the European stainless steel market remains depressed. Demand in Q1/13 remained significantly below last year s level from both end users and stockists. After a promising start in January driven by re-stocking the market activity softened again in February and March. But early indicators, like the PMI and business confidence ratings indicate that the European stainless steel market will improve in HY2/13. Mills: Nobody speaks about profits these days. Market prices continued to drop in Q1/13 to near record lows. Q1/13 results, which will be reported soon, can be expected negative for all European mills. After the significant structural changes in the market (Outokumpu-Inoxum merger and the pending sale of AST), the entire European mill system has to find its new balance once Italy s AST has got new owners and Outokumpu succeeds with its reorganisation (e.g. closure of Krefeld s meltshop). Stocks: After a short period of re-stocking at the beginning of Q1/13, the entire supply chain strives to trim stocks. As stock-reach (days) has increased throughout Europe, stockholders can meet their day-to-day business with current stock levels. Further de-stocking seems unlikely in Europe, contrary to the USA where stocks have risen lately. End Use: Building and construction: Demand will fall again in 2013 by 1-2% in Europe. Germany (after a very slow start due to the harsh winter), United Kingdom, Norway and Baltic Countries are bright spots, where building permits exceed 2012 levels. But low activity in Southern Europe (<50% of 2010 activity) will keep the entire sector down in Consumer goods: Consumer confidence remains high in Central Europe but depressed in Southern European Countries, indicating a decline in the European consumer goods industry. The positive exception seems to be household appliances which aim for the stable year. Transport: Passenger car production is weakening in Q1/13. Even Germany reported substantially lower output in Q1/13 (-11% compared to Q1/12). For the entire year 2013, a minus of 3-4% is prognoses at the moment, but the fall could even be bigger. The demand for trucks and off-road vehicles will decline even stronger than passenger cars. Process Equipment: The German machinery and process industry association VDMA expects a growth of 2% for Orders from Export markets have improved in recent weeks. Some sub-segments, like food processing equipment and breweries expect substantial growth in Krones AG grew at 5,4% in Q1/13 and expects the same growth for the entire year. In Italy, where the process equipment industry is being depressed, equipment orders from chocolate factories are strong, showing that even a recession has its winners. Another one is headache medicine. Bayer, the maker of Aspirin, expects 3 4% volume growth this year. Damstahl 2013, Damstahl - a member of the NEUMO-Ehrenberg-Group - 3 -

4 European Industry News Return to Positive Results in Q1/13 The European stainless steel crude steel production was quite strong in January/February 2013 with almost 1,400,000 t (1% lower compared to the same period 2012). In the three Damstahl Countries, Germany, Sweden and Slovenia the production declined with double-digit rates (around 300,000 t in 2013, compared to almost 400,000 t in the same period 2012), as Outokumpu continued to wind down the Krefeld meltshop. Aperam: A group of companies, including Aperam (majority), Marcegaglia and Arvedi (minorities) are most likely to be in the front row for the take-over of AST. Marcegaglia will be especially important for AST as they could buy substantial volumes of carbon steel hot band from AST. This would contribute to a better capacity utilization of the Terni meltshop, as the stainless steel volumes produced in Terni are expected to fall by at least 350,000 t from 2014 on. On the other hand it remains to be seen, what impact this constellation will have on competitors of Marcegaglia and Arvedi, who are today also important clients of AST. Acerinox and Outokumpu Stainless published their Q1/13 results Financial key figures are shown below: Financial Key Figures (EUR million) Acerinox: Q1/13 was better than the three previous quarters, but significantly lower than Q1/12. Acerinox expects Q2/13 results to be similar to Q1/13. Launch of Phase II in Bahru Stainless, Malaysia: The cold rolling mill is already operating, and the annealing and pickling line testing has begun. Outokumpu Stainless: External deliveries reached 703,000 t in Q1/13 (Q4/12: 644,000 t, Q1/12: 758,000 t). For Q2/13 Outokumpu expects sequentially flat or slightly lower delivery volumes. In order to reduce operating expenses and return the company to profitability, Outokumpu plans significant job reductions (2,500 jobs globally) between 2013 and In 2013, Outokumpu will reduce 770 jobs (of which 570 in Germany). Outokumpu estimates cash cost synergies of mill. EUR per year (~45% expected by end of 2014, ~70% by end of 2015, full run-rate by 2017). Concerning the divestment of the Terni operations, the European Commission extended the timeline for the transaction to accommodate the required EU regulatory process. Damstahl 2013, Damstahl - a member of the NEUMO-Ehrenberg-Group Net Sales Operating Result (EBIT) Net Profit / Loss EBIT Margin Acerinox 1,035 1, % 35 (14) 112.1% 15 (27) 59.9% 3.4% -1.4% Outokumpu 2,221 2, % (82) (307) 31.6% (152) n.a. n.a. -3.7% -14.9%

5 Where do we stand in the Business Cycle? PMI Status March 2013 USA and Europe nosedived, only China improved Mar-13 Damstahl 2013, Damstahl - a member of the NEUMO-Ehrenberg-Group - 5 -

6 China Monthly Exports February 2013 The usual February (Chinese New Year) slump China monthly Exports* 200, , ,000 Flat Products Long Products 140,000 [ metric tonnes] 120, ,000 80,000 60,000 40,000 20,000 - *excl. internal trade Damstahl 2013, Damstahl - a member of the NEUMO-Ehrenberg-Group - 6 -

7 Relevant Issues in Damstahl-Land Germany, Netherlands Germany: The demand in the German stainless steel market has not met earlier expectations in April. There was no increase in orders as it usually occurs after Easter holidays. Distributors are very hesitant with new orders after nickel showed new weakness. Stocks are considered on target level. The situation is slightly better among endusers, but still not satisfactory. The debt-crisis is back ZEW s (Centre for European Economic Research) indicator of economic sentiment for Germany fell by 12.2 points in April 2013 to 36.3 points. Despite its decline, the indicator is still at its third highest mark within the last 24 months. The current level has only been exceeded in the two preceding months. The surveyed financial market experts remain confident, but are less optimistic than they have been in previous month. In February 2013, the German industrial production decreased by 1.8% compared to the same month in GEA Group: Order intake in Q1/13 amounted 1,447 mill. EUR. Adjusted for currency effects and acquisitions, it was down by 85 mill. EUR on the previous year. For FY2013, GEA expects that demand in its sales markets will match the high levels seen in The group is expecting moderate revenue growth in FY2013. EBITDA of around 700 mill. EUR are targeted for 2013 (2012: around 600 mill. EUR). VDIK (Association of International Motor Vehicle Manufacturers) reports that the number of new registrations in the German passenger car and commercial vehicle market was lower in Q1/13 compared to Q1/12 (passenger cars -12% and commercial vehicles -15%). While the lighter commercial vehicles were just slightly lower, the heavy commercial vehicles >6 t and >16 t were down by -24% and -18% respectively. Netherlands: The volume of exports of goods increased by 3% in February 2013 (yoy). In the same period, the volume of imports grew by 1.5%, which is the lowest growth rate in almost twelve months. According to Statistics Netherlands, the average output of the Dutch manufacturing industry was also 2% down in February 2013 from February The output in the sector petroleum, chemical, rubber and plastic products was more than 5% below the level of February The sectors electrical products and machinery (nearly 5%) and transport equipment (4%) also faced a considerable downturn. DSM and Shell published their Q1/13 results Financial key figures are shown in the table below: Financial Key Figures Net Sales Operating Result (EBIT) Net Profit / Loss EBIT Margin DSM (EUR million) 2,376 2, % % % 7.7% 8.7% Shell (USD million) 112, , % 13,298 15, % 8,229 8, % 11.8% 12.8% Damstahl 2013, Damstahl - a member of the NEUMO-Ehrenberg-Group - 7 -

8 Relevant Issues in Damstahl-Land Denmark, Sweden Denmark: Denmark is facing an extremely tough competition in the stainless steel market these days and the situation will persist over the coming months. The unprecedented level of aggressiveness is the result of distributors that are being squeezed between attempts to raise prices by their European suppliers and the aim not to loose market share. Therefore they increase their share of Asian material (mainly sheets) sales to the Danish market at very low prices. Krüger A/S: The Danish manufacturer of technology and equipment for wastewater and drinking water treatment (a 100% subsidiary of Veolia Water Solutions & Technologies), has supplied Faxe Spildevand s wastewater treatment plant with a new future-proof digester. Faxe Spildevand A/S expanded its digester from 500 to 600 m³. The new Krüger digester maximizes the utilization of volume and minimizes the risk of corrosion. Further, the Krüger design provides easy access for maintenance purposes and supports a safe working environment. Dantherm: The Danish manufacturer of heating, ventilation and air conditioning systems reported total revenues of 482 mill. DKK in FY2012 compared to 550 mill. DKK in 2011 (-12%) and posted an operating loss of 6.2 mill. DKK in FY2012 against an operating profit of 22.5 mill. DKK in For FY2013, Dantherm expects total revenues between 525 and 550 mill. DKK and an operating profit of 5 to 20 mill. DKK. In February 2013, the Danish industrial production decreased by 2.6% compared to the same month in Sweden: The stainless steel market is basically at a standstill. Volumes are below last years figures, but stable. Expectations are for HY2/13, that the Swedish economy will start to move upwards again. Alfa Laval: The order intake was 7,160 mill. SEK in Q1/13, unchanged compared to Q4/12 and -9% yoy. Nine new orders for large projects were reported in Q1/13 with a total value of more than 600 mill. SEK. including an order for the supply of heavy oil treatment systems to a power plant in Middle East (order value 90 mill. SEK, finalized in 2013), compact heat exchangers to a gas plant in Russia (order value 60 mill. SEK, finalized in 2014) and plate heat exchangers for cooling applications in Canada (order value 60 mill. SEK, finalized in 2014). Alfa Laval and BE Group published their Q1/13 results Financial key figures are shown in the table below: Financial Key Figures (SEK million) Net Sales EBITA Net Profit / Loss EBITA Margin Q1/13 Q1/12 Q1/13 Q1/12 Q1/13 Q1/12 Q1/13 Q1/12 Alfa Laval 6,535 6, % 1,067 1, % % 16.3% 16.5% BE Group 1,032 1, % (17) 41 n.a. (27) 19 n.a. -1.6% 3.1% In February 2013, the Swedish industrial production decreased by 0.9% compared to the same month in Damstahl 2013, Damstahl - a member of the NEUMO-Ehrenberg-Group - 8 -

9 Relevant Issues in Damstahl-Land Norway, Slovenia Norway: The Norwegian manufacturing industry output came to a halt in Q1/13 due to weak demand and lower prices in export markets. However, home market prices continued to rise and the supply of new orders from home markets remained at a high level. The situation was particularly poor for traditional export industries such as basic metals, chemicals and producers of building materials. Outlook for Q2/13 is considered to be better, and planned investments are upward adjusted. Prospects of growth in total output and new orders received support this view. Seasonally-adjusted figures show that the total turnover in the Norwegian manufacturing sector fell by 0.9% from December 2012 to February The Producer Price Index (PPI) rose by 0.9% from February to March Higher prices of electricity and natural gas were the main reason behind the increase in PPI. From March 2012 to March 2013 the PPI declined by 3.4%. Scana: After a net loss of -46 mill. NOK in Q4/13 and asset writedowns of 77 mill. NOK, the company had to reduce its capital and issue new shares at a value of 0,1 NOK/share. Aker Solutions: In Q1/13, Aker Solutions has won a 30 mill. GBP contract to provide hook-up, commissioning and facility management services to Premier Oil for the Solan field development in the UK sector of the North Sea. The contract is valid for three years from first oil (plus 3x1 year extension options). First oil production is expected in Q4/14. Solan is expected to produce 40 mill. barrels of oil. Aker Solutions has also been awarded a contract from Technip to deliver two dynamic power and control steel tube umbilicals (super-duplex) and ancillary equipment umbilicals for the Girassol Resources Initiative (GirRI) phase 2 development off the coast of Angola. Statoil: In April 2013, Statoil has awarded a 160 mill. GBP contract for drilling services on the Mariner platform in the UK sector of the North Sea. Mariner platform is currently under construction and the drilling start is scheduled for November The contract duration is four years from November 2016 (plus 3x2 years extension options). Statoil expects to start production from Mariner in The field is expected to produce for at least 30 years. The average production is estimated at around 55,000 barrels of oil per day over the plateau period from 2017 to Slovenia: Demand in April 2013 increased due to the implementation of large projects Krka (building a new water preparation plant) and TEŠ (construction of a new generator). Export is still weakening because of low orders coming from Germany and Austria and stocks are on a low level. Outlook for Q2/13: Order increases in tonnage and value. The value of industrial production in February 2013 was higher in both comparisons compared to January 2013 and February 2012 by 3.4%. The value of construction put in place decreased by 11.3% in February 2013 (yoy). Gorenje: The Slovenian appliance manufacturer completed the relocation of washing machine and dryer production from Sweden to Velenje as previously announced. The production line for dishwashers will be relocated in HY2/13. By the transfer of production to plants with lower costs, Gorenje expects annual savings of at least 15 mill. EUR. Acroni is ramping up its modernized plate mill and expects a stainless steel plate production of 100,000 t in 2013 (80,000 t in 2012). Damstahl 2013, Damstahl - a member of the NEUMO-Ehrenberg-Group - 9 -

10 Report: Stainless Steel in Damstahl-Land, No. 11, March 2012 Damstahl 2012, Damstahl - a member of the NEUMO-Ehrenberg-Group