Damstahl Stainless Steel Briefing September 2015

Transcription

1 Damstahl Stainless Steel Briefing September Damstahl Damstahl 2015, 2015, Damstahl --a member of of the the NEUMO-Ehrenberg-Group - 1 -

2 Report on Market Highlights Contents Stainless Steel at a Glance European Industry News & Business Climate (PMI) Market Performance: Relevant Issues in Germany Netherlands Denmark Sweden Norway Slovenia Finland - 2 -

3 Stainless Steel at a Glance Race to the bottom Prices: Nickel below 10,000 $/t sends shockwaves through the stainless steel markets. Stainless prices have reached historic lows in early September. Despite the fact that the price leader China has been fully banned from the European market after the final ruling on AD duties, no base price increases were implemented by the EU mills. Also bar prices came under new pressure amid a weakening market. Alloy surcharge: Stainless surcharges fell for the third consecutive month in a row in September to an 18-month low. Finnish stainless producer Outokumpu set the surcharges for type 304 (1.4301) at 1,082 /t, down from 1,166 /t corresponding to a decrease of around 7%. September surcharges for type 316 were set at a 20-month low of 1,481 /t down from 1,607 /t in August (-8% mom). Market Segments: Building & Construction: Euroconstruct, the European building and construction association, estimates the total value of European construction activity to amount to around 1,366 bn EUR in 2015 (+1.9% yoy). The total value is expected to amount to around 1,436 bn EUR by 2017 with an upward trend in all major European construction markets. The United Kingdom is showing the strongest growth potential while a further recovery of the building activity in France, Italy, Spain and the Netherlands is anticipated. Civil engineering is expected to be the main driver in the construction market, especially in Central and Eastern Europe. Consumer Goods: Order intake in the German electronics industry rose by around 23.0% yoy in June. While the domestic order intake rose by only 4.3% yoy, order intake from the Eurozone (+19.8% yoy) and third countries (+48.3% yoy) showed massive doubledigit growth. Revenues totalled 15.7 bn EUR, corresponding to an increase of around 10.4% over the same month last year. In the first half of 2015 order intake was around 6.9% higher than in the same period of the preceding year. Automotive: In June 2015 demand for new passenger cars in EU rose by 14.6% yoy to mill. units, thus recording growth for the 22 nd consecutive month. The fastest growing countries were once again Spain (+23.5% yoy) followed by France (+15.0% yoy). Also Italy (+14.4% yoy), Germany (+12.9% yoy) and the UK (+12.9% yoy) contributed positively to the upturn. In the first half of 2015 the EU market expanded by 8.2% totalling around mill. new passenger cars. Process Industry: According to the German engineering association, VDMA, the output of the German mechanical engineering industry dropped by 4% yoy in June International business declined by 9% yoy after stagnating in May, while domestic business rose by around 7%. The high drop was mainly due to a double-digit decline of orders outside the Eurozone. Especially exports to Russia continue to decline sharply. After a decrease in export volume to Russia of around -17% last year, VDMA reports a further drop to around -30% as of May

4 European Industry News / Business Climate Industry News Business Climate at a Glance PMI - 4 -

5 European Industry News Melting production down by 5% yoy and currency effects show their strong impact The European stainless crude steel production amounted to approximately 3.9 mill. t in HY1/15, which is around 5% lower than in HY1/14. Production in Austria, Belgium, Finland, Slovenia and Sweden increased while production volumes in other European countries declined. The shutdown of Outokumpu s German melting operations as well as the imposed anti dumping duties on Chinese and Taiwanese cold rolled stainless steel products have not yet resulted in a major easing of the strained situation in the European stainless market. Additionally, currency effects are reflected in the financial figures in Q1 and Q2. But, after US dollar gained significant strength against the euro in the 1st half of 2015, it recently stabilised providing no further boost to the European stainless producers. Outokumpu has increased its share in the Finish nuclear power project Fennovoima by 1.8% to 14%. Outokumpu is the biggest electricity consumer in Finland and the new power plant shall be commissioned in The company also announced to relocate its headquarters from Espoo to Helsinki in order to save costs. Revenues of Swiss Schmolz + Bickenbach (S+B) marginally rose from around 1,488 mill. EUR in HY1/14 to around 1,489 mill. EUR in HY1/15. The sales volume totalled 952 kt in HY1/15, corresponding to a decrease of 3% compared to 980 kt in HY1/14. EBIT amounted to 49 mill. EUR in HY1/15, down by 33% set against 74 mill. EUR in HY1/14. Schmolz + Bickenbach s EAT turned from a 35 mill. EUR profit in HY1/14 into a 118 mill. loss in HY1/15. The group s earnings are impaired by the currency effects of a strong Swiss franc against a weakening euro. Tubacex registered sales of around mill. EUR in HY1/15, corresponding to an increase of 9.4% compared with sales of mill. EUR in HY1/14. Despite that increase, EBIT fell from 24.0 mill. EUR in HY1/14 to 17.9 mill. EUR in HY1/15 (-25.3% yoy). The company s EAT totalled 14.0 mill. EUR in HY1/15 which is around 1.8% above the HY1/14 EAT of 13.7 mill. EUR. The results include the integration of IBF and the seamless stainless steel tubes division of Prakash. For Q2/15 Sandvik Materials Technology (SMT) reports an order intake of 3,054 mill. SEK, corresponding to a decrease of around 12% set against 3,449 mill. SEK in Q2/14. Revenues in Q2/15 amounted to around 3,639 mill. SEK compared with revenues of 3,866 mill. SEK in Q2/14 (-6% yoy). The company s EBIT heavily declined, dropping from 647 mill. SEK in Q2/14 to 286 mill. SEK in Q2/15 (-56% yoy)

6 Where do we stand in the business cycle? PMI Status July 2015 EU about to overtake the US, China stuck at the Break Even Point - 6 -

7 China Monthly Exports May 2015 Flat Products nosedived (-20%) while Long Product exports (+17%) fully recovered from the Lunar New Year drop May

8 Market Performance in Damstahl-Land Summary: Relevant Issues in Damstahl-Land Germany Netherlands Denmark Sweden Norway Slovenia Finland - 8 -

9 Relevant Issues in Damstahl-Land Germany, Netherlands Germany: Stock levels in the German stainless steel market were stable in August and due to a good availability delivery times remain short. Both the demand for stainless products and the consumption kept reasonably stable throughout the summer period. As the stainless surcharge was lowered again for September, additional price pressure will increase the already fierce competition. As the summer period in some German states reaches into mid-september, the market will not fully revive before the end of the month. Krones: Revenues of the filling and packaging equipment manufacturer grew by around 4.8% yoy in HY1/15 to 1,504 mill. EUR. The largest sales region once again was Europe with a contribution of 36.2% (HY1/14: 32.1%). New orders in HY1/15 totalled 1,524 mill. EUR, corresponding to an increase of around 4.3% over the order intake of HY1/14 at 1,462 mill. EUR. EBT rose by 16.4% yoy from 89 mill. EUR in HY1/14 to 104 mill. EUR in HY1/15. The company s EBT margin in HY1/15 improved to 6.9% up from 6.2% in HY1/14. For the full year 2015 Krones expects an increase in revenues of 4% and an EBT margin of 7.0%. GEA: In its half year report for 2015 the company reports revenues of 2,157 mill EUR, showing growth of 4.3% over its HY1/14 sales of 2,068 mill. EUR. Order intake totalled 2,276 mill. EUR in HY1/15, corresponding to an increase of 3.7% compared to an order intake of 2,194 mill. EUR in HY1/14. The company s EBIT in HY1/15 significantly declined by 70.4%, totalling 47 mill. EUR (HY1/14: 157 mill. EUR). In order to increase profitability, the company reduced its workforce by around 300 employees to date. Netherlands: With the market participants returning from the summer holidays also the demand for stainless steel is slowly finding the way back to a regular level. The sentiment not to buy more than absolutely needed still dominates and therefore delivery times remain short. Nevertheless, the Dutch economy is expected to grow slightly in the coming months, putting emphasis on the export business, which will be the basis for a long term improvement also for the stainless steel market. Royal Dutch Shell (RDS): The company announced to be set to repay its debt of 1.73 bn EUR to the National Iranian Oil Company once the sanctions imposed on the country by the UN Security Council are lifted again. Royal Dutch Shell eyes to re-enter business relations in the Iran which currently holds more than 9% of the global oil reserves. Akzo Nobel: Revenues of the Dutch specialty chemicals producer in HY1/15 totalled 7,540 mill. EUR up from 7,093 mill. EUR in HY1/14 (+6% yoy). The company s EBIT rose from 569 mill. EUR in HY1/14 to 792 mill. EUR in HY1/15, corresponding to an increase of 39% yoy. EAT amounted to 491 mill. EUR in HY1/15 up by 47% on the company s HY1/14 EAT of 334 mill. EUR. According to Akzo Nobel s half year report, figures are on track to deliver 2015 targets

10 Relevant Issues in Damstahl-Land Denmark, Sweden Denmark: The Danish stainless steel industry is rather positive for the time being. Companies are reporting a pickup in both activity and investment willingness which is reflected in an increase in new order intake and projects. Even though demand is currently somewhat satisfying, the drop of the alloy surcharge has led to an even more intense price battle between distributors. Danfoss: The company ended HY1/15 with revenues of 19,239 mill. DKK set against 16,920 mill. DKK in HY1/14 (+14%). EBIT in HY1/15 totalled 1,868 mill. DKK corresponding to a decline of around 4% over the HY1/14 EBIT at 1,955 mill. DKK. Danfoss EAT fell by 6% from 1,187 mill. DKK in HY1/14 to 1,117 mill. DKK in HY1/15. According to the company s report, results were in line with expectations. For the full year 2015 Danfoss forecasts an increase in revenues of around 9-14% while EBIT is expected to be on par with 2014 due to the integration cost of the drive manufacturer Vacon. Dantherm: In HY1/15 climate control solutions supplier Dantherm realized sales of 196 mill. DKK compared with 205 mill. DKK in HY1/14 (-3.4% yoy). The company s EBIT improved from a loss of 21 mill. DKK in HY1/14 into a loss of 13 mill. DKK in HY1/15. Main reason for the loss was the poor performance of the company s Telecom segment (EBIT HY1/15: -13 mill. DKK), which is still subject to divestment. For the full year 2015 the company sticks to its forecast at an improved EBIT of 5-10 mill. DKK and revenues at similar level to 2014 at 441 mill. DKK. Sweden: Uncertainty about future developments in the stainless steel industry dominates the Swedish market. The substantial fall of the alloy surcharge is exerting heavy pressure on margins, which is especially hard for poorly capitalised companies. Business is more than ever conducted on a day to day basis and the outlook for the rest of the year lets assume no major improvement of this situation. Alfa Laval: On August 26 th the company announced to have secured an order to supply boiler modules for a floating production storage and offloading vessel to be built in China and then anchored outside the Nigerian coast. Delivery for the 90 mill. SEK project is scheduled for SSAB: The company s revenues totalled 30,771 mill. SEK in HY1/15 set against revenues of 29,806 mill. SEK in HY1/14 (+3% yoy). Currency effects of the Swedish Krona positively impacted the HY1/15 sales by around 1,100 mill. SEK compared with HY1/14. SSAB S EBIT rose by 13% from 267 mill. SEK in HY1/14 to 301 mill. SEK in HY1/15. EAT strongly increased from 92 mill. SEK in HY1/14 to 491 mill. SEK in HY1/15. Getinge Group: The medical equipment supplier reports sales of 14,708 mill. SEK in HY1/15, corresponding to an increase of 16.5% compared with HY1/14 at 12,628 mill. SEK. Getinge s EBIT strongly improved by 81.9%, totalling 762 mill. SEK in HY1/15 up from 419 mill. SEK in HY1/14. The group s EAT quadrupled from 71 mill. SEK in HY1/14 to 283 mill. SEK in HY1/

11 Relevant Issues in Damstahl-Land Norway, Slovenia Norway: The Norwegian stainless steel market still suffers from the persisting oil price slump which is intensified by growing global economic uncertainty. In the face of worsening economic conditions caused by delayed or cancelled projects in the oil and gas industry, companies in the Stavanger area continue to reduce headcounts and cut back investments. Unemployment jumped to a ten-year high in July and as a reaction to the fast rising number the Norwegian central bank will most likely cut the interest rates for the third time in ten months. Yara International: The specialty chemicals producer announced to invest around 263 mill. USD in a new urea granulator for its urea solution plant in Sluiskil, Netherlands. The new unit will replace an old prilling unit and will increase the capacity by 260,000 t to around 660,000 t. Construction of the new unit will start in 2015 with completion expected in the second half of Norske Skog: Revenues of the pulp and paper company amounted to 2,786 mill. NOK in Q2/15, down by around 3.5% on Q2/14 revenues of 3,018 mill. NOK. Norske Skog s EBIT turned from a profit in Q2/14 of 5 mill. NOK to a loss of 276 mill. NOK in Q2/15. The company s EAT further worsened from -148 mill. NOK in Q2/14 to -571 mill. NOK in Q2/15. In its recent quarterly report Norske Skog revealed plans to enter the bio energy business by leveraging bio-waste from its paper production to renewable energy. In addition to that, the company plans to start a tissue production site in Bruck, Austria as a joint venture with the Italian company Roto-cart. Slovenia: Contrary to expectations new order intake and demand in the Slovenian stainless steel market picked up in August. As the summer break comes to an end, a further upturn is expected for September. Nevertheless prices are still under pressure as the stainless surcharge was lowered again for September and competition stays fierce. Mainly due to a strong export business, the Slovenian economy is experiencing an upswing, which is reflected by a good business climate. The main Slovenian steel producer SIJ (Acroni and Metal Ravne) is pursuing several investment projects in order to increase capacity, productivity and move into high value add products (see below). Gorenje Group: H1/15 revenues of the Gorenje Group totalled 558 mill. EUR down by 8% on HY1/14 revenues at 605 mill. EUR. The group s EBIT in HY1/15 almost halved at 10.7 mill. EUR compared to 21.1 mill. EUR in HY1/14 (-49.2% yoy). Gorenje s EAT turned from a profit of 3.1 mill. EUR in HY1/14 to a loss of 6.9 mill. EUR in HY1/15. In reaction to deteriorating macroeconomic conditions in Russia and the Ukraine, the company introduced measures to adjust the cost of its sales organization to the persistent harsh market conditions. Slovenian Steel Group SIJ: At the end of July the group s management announced to strategically diversify SIJ s operations and to enter the food industry. In order to pursue the new strategy, the Slovenian Steel Group confirmed plans of a 40 mill. EUR capital increase and ownership restructuring in Perutnina Ptuj, the largest Slovenian meat processing company. The Perutnina Ptuj Group comprises of 18 companies in six countries, counting 3,600 employees and 500 co-operatives, generating 257 mill. EUR in revenue

12 Relevant Issues in Damstahl-Land Finland Damstahl-Land has grown: As already suggested by our Topic of the Month in our last Stainless Steel Report, Damstahl has successfully expanded into the Finnish market. We are pleased to announce that as per 1 st of August 2015 we newly established Damstahl Oy in Hämeenlinna, Finland in order to strengthen our Nordic market presence. The new base is led by Mr. Christer Grankvist, who spent all his professional life within the stainless steel industry abroad as well as in Finland. Finland: The Finnish stainless steel market is still relatively calm at the end of the summer season. Upcoming industrial investments are expected to be the driver for the market in the next months. Also a rising demand for engineering works and subcontractors alongside a number of projects in the marine sector becomes visible. In spite of the tough competition and the pressure on margins, optimism broadens about the development in the near future. Metsä: Sales of forest industry group totalled 2,585 mill. EUR in HY1/15, corresponding to an increase of 2.6% set against HY1/14 at 2,519 mill. EUR. Metsä s EBIT rose from 230 mill. EUR in HY1/14 to 272 mill. EUR in HY1/15 (+18.2%). EAT was positive in HY1/15, totalling 181 mill. EUR up by around 27.5% on the company s HY1/14 EAT at 142 mill. EUR. Neste: The company operates 2 oil refineries in Finland and a number of petrochemical plants around the globe. The HY1/15 revenue fell by almost 30% to 5,348 mill. EUR, down from 7,613 mill. EUR in HY1/14. Sales mainly fell due to lower selling prices and maintenance downtimes in Q2/15. The company s EBIT more than doubled in HY1/15, totalling 293 mill. EUR, set against an EBIT of 136 mill. EUR in HY1/14. Neste s EAT in HY1/15 amounted to 204 mill. EUR up from around 76 mill. EUR in HY1/

13 Damstahl now also speaks ANSI As of now in stock ANSI-Range for fittings, welded tubes and flanges Check out the full range here

14 Damstahl Group: Germany, Denmark, Sweden, Norway, the Netherlands, Slovenia and Finland Damstahl GmbH Raiffeisenstr D Langenfeld T: / F: / dsde@damstahl.com - Office Hamburg: Damstahl GmbH Geschwister-Beschütz-Bogen 6 D Hamburg T: / F: / Office Niederlande: Damstahl B.V. Langesteijn 123 NL-3342 LG Hendrik-Ido-Ambacht T: / F: / Office Magdeburg: Damstahl GmbH Schleinufer 11 D Magdeburg T: / F: / Edelstahlservice Frankfurt: Hanauer Landstr. 293B D Frankfurt/Main T: / F: / Office Stuttgart: Damstahl GmbH Zettachring 2 D Stuttgart T: / F: / Office Munich: Damstahl GmbH Elly-Staegmeyr-Str. 2 D Munich T: / F: / Office Slovenia: Damstahl GmbH Pesnica pri Mariboru 38/a SI 2211 Pesnica pri Mariboru T: / M: /

15 Damstahl Stainless 2015, Damstahl Steel Briefing - a member No. 95 of September the NEUMO-Ehrenberg-Group 2015